Appeal from the United States District Court for the Northern District of Illinois, Eastern Division. No. 74 C 2675 -- James B. Moran, Judge .
Before Bauer, Circuit Judge, PECK, Senior Circuit Judge,*fn* and Cudahy, Circuit Judge.
This cause of action is before us for the second time. The first time we reviewed this matter, we reversed the district court entry of a directed verdict in favor of defendants-appellants Motor Dispatch, Inc. and Harry Newberger and remanded for a new trial. It is from this second trial that Newberger and Motor Dispatch appeal. For the reasons discussed in this opinion, we again reverse the judgment of the district court and remand for a new trial.
Plaintiff-appellee Pinto Trucking Service ("Pinto") filed this lawsuit in September 1974 alleging that Motor Dispatch, Appaloosa Air Cargo, Inc. ("Appaloosa"), Harry Newberger, John Davie, William Marston, and Stephen Meyers conspired unlawfully to destroy Pinto as a business competitor. The eight count complaint charged that the defendants committed illegal acts in furtherance of the conspiracy which violated section 1 of the Sherman Act, 15 U.S.C. § 1, and were business torts under state law.
The first trial began on July 19, 1977. On August 4, at the conclusion of Pinto's case, the District Court for the Northern District of Illinois, the Honorable J. Sam Perry presiding, granted Motor Dispatch's and Newberger's motions for directed verdicts on all eight counts of the complaint. On August 11, the jury found for Pinto against the Appaloosa defendants*fn1 on some of the counts in the eight count complaint. The Appaloosa defendants moved for judgments notwithstanding the verdict on the ground that the judgments were contrary to law and unsupported by the evidence. The district court granted the defendants' motions with respect to some of the jury verdicts and denied them with respect to others.*fn2
On appeal to this court, we reversed the district court orders granting defendants Newberger's and Motor Dispatch's motions for directed verdicts and the Appaloosa defendants' motions for judgments notwithstanding the verdict. We remanded the case "for a new trial with respect to defendants Motor Dispatch and Newberger and for a new trial on the issue of damages with respect to defendants Appaloosa, Davie, Marston and Meyers." Pinto Trucking Service, Inc. v. Motor Dispatch, Inc., 588 F.2d 837, slip op. at 25 (7th Cir. 1978).
On remand to the District Court for the Northern District of Illinois, the Honorable James B. Moran presiding, Pinto filed a motion for partial summary judgment requesting that the district court collaterally estop Newberger and Motor Dispatch from litigating the issues decided against the Appaloosa defendants in the first trial.*fn3 The district court granted plaintiff's motion, thereby binding Motor Dispatch and Newberger to the first trial finding that the Appaloosa defendants conspired in violation of the Sherman Act and committed various unlawful acts in furtherance of the conspiracy. Pinto Trucking Service, Inc. v. Motor Dispatch, Inc., 485 F. Supp. 484, 489 (N.D.Ill.1980).
The second trial commenced on July 7, 1980. The jury found for Pinto and against Motor Dispatch and Newberger on counts I, II, III, and IV of the complaint. The jury assessed damages against all the defendants. Only Motor Dispatch and Newberger appeal.
The first question presented for review in this case is whether the district court erred in collaterally estopping Newberger and Motor Dispatch from litigating the issues decided in the first trial. Appellants claim that they were denied due process because the collateral estoppel order denied them the opportunity to defend the charges against them. We agree.
At the beginning of the retrial, the trial court instructed the jury that certain issues had been conclusively proven as a matter of law and that the jury was bound to accept these conclusions for purposes of the second trial. The trial court stated:
Specifically it has been determined as a matter of law and this is determined as a matter of law with respect to all defendants that commencing in the late summer or early fall of 1973, defendants John Davie, William Marston and Appaloosa Air Cargo, Inc., conspired intentionally to injure Pinto Trucking Service, Inc., and unfairly to deprive Pinto of air freight business which it had established between Chicago and Detroit.
Tr. at 46. The court also informed the jury that it had been established as a matter of law that (1) Davie breached his fiduciary duties owing to Pinto while he was employed by Pinto; (2) Marston, Meyers, and Appaloosa unlawfully induced Davie to breach his employment duties to Pinto; (3) the Appaloosa defendants unlawfully interfered with Pinto's business relationships with its customers; (4) Davie unlawfully interfered with the business relationships between Pinto and its trucker ...