United States District Court, Northern District of Illinois, E. D
February 27, 1973
JOHN T. MCMACKIN D/B/A MCMACKIN HARDWARE CO., ON BEHALF OF HIMSELF AND ALL OTHERS SIMILARLY SITUATED, PLAINTIFF,
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.
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.
In its discussion of Count II and the test of economic power
under § 3 of the
Clayton Act, the previous opinion analyzed the issue in light
of the Fortner case and cases and commentary following
Fortner. Those cases, of course, dealt with the per se test
of illegality under the Sherman Act, but they are deemed
relevant also to the issue of the showing required under the
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
"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.
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.
Accordingly, pursuant to Rule 23(c)(1), the previous order
determining that this suit may be maintained as
a class action is hereby stayed pending the court of appeals'
decision in the Lupia case. Further action on the class
issues and related motions in this case will be held in
abeyance until further order of the Court. After Lupia is
decided, the Court will consider the briefs heretofore
submitted by the parties, as well as any further memoranda
which may be necessitated by the decision of the court of
appeals. In the meantime, discovery relating solely to the
class action aspects of the case will be suspended.
It is so ordered.