United States District Court, Northern District of Illinois, E.D
April 1, 1983
CAR CARRIERS, INC., ET AL., PLAINTIFFS,
FORD MOTOR COMPANY AND NU-CAR CARRIERS, INC., DEFENDANTS.
The opinion of the court was delivered by: Shadur, District Judge.
MEMORANDUM OPINION AND ORDER
Car Carriers, Inc. ("Car Carriers"), its affiliate Clark
Transport Company, Inc. ("Clark"), their controlling
shareholder James P. Byrne, and four other related
entities*fn1 bring a six-count Complaint
against Ford Motor Company ("Ford") and Nu-Car Carriers, Inc.
-("Nu-Car"). Count I charges a conspiracy in violation of
Sherman Act § 1 ("Section 1"), 15 U.S.C. § 1. All other counts
assert pendent state law claims. Both Ford and Nu-Car have
moved to dismiss (1) Count I for failure to state a cognizable
antitrust claim and (2) Counts II-VI for lack of pendent
jurisdiction. For the reasons stated in this memorandum opinion
and order, their motions are granted.
Allegations of the Complaint*fn2
From 1968 until late October 1981 Car Carriers and Clark
hauled all new Ford automobiles from Ford's assembly plants
and railheads in Chicago. Though Clark may have provided
haulaway transportation for other automobile producers as
well, Car Carriers served only Ford. As to their Chicago
traffic*fn3 both carriers operated under carrier authority
issued by both the Interstate and Illinois Commerce
Commissions. Their rates were therefore subject to the
approval of those governmental bodies. Ford also "dictated and
controlled" the tariffs by threatening either to oppose any
disfavored rate applications or to take punitive action, such
as termination. Complaint ¶ 19(d).
Some time during the mid-1970s Ford and some of its other
carriers, including Nu-Car, E & L Transport Company ("E & L
Transport"), Motor Convoy, Inc. ("Motor Convoy"), Auto Convoy
Co. ("Auto Convoy") and Associated Transport, Inc.
("Associated"),*fn4 embarked on a campaign to terminate Car
Carriers, Clark and some other carriers then serving Ford*fn5
and to force them to sell their businesses at cut-rate prices.
That predatory scheme had five operative elements:
1. Ford induced each target carrier to invest
heavily in new tractor-trailer rigs, real estate
and new terminal facilities "with the promise of
additional transportation traffic and complete
agreement with increased tariff rates necessary
to pay for" those acquisitions. Complaint ¶¶ 19(b)
2. Ford then precluded those carriers from
obtaining rate increases sufficient to operate
their expanded businesses profitably. Complaint
¶¶ 19(d) and (e).
3. With the cooperation of the non-target
carriers, Ford "[i]nterfered with and prevented
target haulaway carriers and their affiliates
from selling their businesses and assets as going
business concerns or prevented target haulaway
carriers from consolidation or merger with other
carriers." Complaint ¶ 19(h).
4. Ford then terminated its relationship with
the disfavored carriers, assigning their traffic
to the co-conspirator carriers.
5. At that point the favored carriers were in
the position of acquiring the assets of the
target carriers at distress prices. Complaint
Though Car Carriers' demise generally tracked this scenario,
some elaboration of its victimization is instructive. At the
inception of the conspiracy in 1975, Ford directed Byrne to
sell Car Carriers to someone who would not seek tariff rates
as high as those sought by Car Carriers. Byrne then attempted
to sell Car Carriers to co-conspirator E & L Transport. After
they had executed a letter of intent, Ford induced E & L
Transport to renege on the
deal by threatening to withhold Car Carriers' Chicago traffic
from E & L Transport.
In 1977 and 1978 Ford ordered Car Carriers to purchase 80
new tractor-trailer rigs for $6 million, promising sufficient
rate hikes to recover that investment. Though Car Carriers
acceded to the demand, Ford thereupon stymied Car Carriers'
efforts to obtain regulatory approval for the tariff
In late 1979 Car Carriers attempted to bolster its financial
posture by acquiring ATI, another target carrier. Ford not
only blocked that consolidation initiative but also terminated
ATI. Initially Ford divided ATI's business among Nu-Car, E &
L Transport, Car Carriers and Clark. But within three months
Ford transferred Car Carriers' share to E & L Transport.
In the summer of 1981 Ford solicited bid proposals from Car
Carriers and other Ford Carriers for its Chicago haulaway
business, all of which had been allocated to either Car
Carriers or Clark. Ford awarded the business to Nu-Car "on the
basis of a sham and knowingly predatory bid." Complaint ¶
Needless to say, plaintiffs' haulaway operations were then
in shambles. Cut off from Ford, plaintiffs were unable to use
their newly-purchased tractors and rigs and their terminal
facility adjacent to Ford's Chicago plant. To minimize their
staggering losses, plaintiffs attempted to sell the facility
and other assets to Nu-Car at sub-market prices. Negotiations
were scuttled when Nu-Car at Ford's behest "insisted on
`walk-away' and other onerous provisions . . . as well as
unacceptable covenants and releases of claims of plaintiffs
against Nu-Car, Ford and Associated Transport." Complaint
¶ 20(i). Instead, Nu-Car built its own terminal facility next
to Ford's plant on land supplied by Ford.
Count I really asserts a conspiracy encompassing two
1. to exclude target carriers from the "market"
for haulaway transportation of Ford cars and
2. to refuse to purchase, except at distress
prices, the assets of the target carriers upon
However, neither of those aspects of the alleged overall
conspiracy passes Rule 12(b)(6) muster.
More than one road leads to that destination. But the
shortest one, the one that requires least discussion, is
plaintiffs' lack of "antitrust standing" to recover treble
damages under Clayton Act § 4, 15 U.S.C. § 15. And such
standing is a threshold requirement that must be met,
regardless of whether the substantive antitrust claim is
grounded on a per se or rule of reason theory.
"Antitrust standing" concepts require a plaintiff to suffer
the type of harm the antitrust laws were designed to
recompense: "treble-damages recoveries should be linked to the
pro-competition policy of the antitrust laws." Blue Shield of
Virginia v. McCready, ___ U.S. ___, ___, 102 S.Ct. 2540, 2550,
73 L.Ed.2d 149 (1982). Accord, Brunswick Corp. v. Pueblo
Bowl-O-Mat, Inc., 429 U.S. 477, 489, 97 S.Ct. 690, 697, 50
L.Ed.2d 701 (1979) (emphasis in original):
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.
Here the Complaint's allegations, coupled with plaintiffs'
concessions in their responsive memorandum, foreclose
any possibility of anticompetitive harm from either component
of the putative conspiracy.
1. Conspiracy To Terminate Plaintiffs
Plaintiffs have really conceded the supposed conspiracy to
squeeze them out was motivated solely by Ford's desire to
replace high-priced suppliers (plaintiffs) with a low-priced
1. Complaint ¶¶ 19(d) and (e) acknowledge Ford's
resistance to the increased tariff rates proposed
2. Complaint ¶ 20(h) admits Ford diverted its
Chicago traffic from plaintiffs to Nu-Car on the
basis of the latter's lower (and allegedly
3. In embellishing on the assertion of
Complaint ¶ 20(a) that Ford had ordered Byrne to
sell Car Carriers, plaintiffs' Mem. 5 ascribes a
procompetitive motive to Ford: Ford desired the
sale of "Car Carriers to someone `more
suitable' . . ., because Car Carriers had requested
Ford approval of what Ford considered unduly high
All this is of course a prototype of procompetitive rather
than anticompetitive activity.
Indeed the conspiracy's procompetitive potential is a
necessary consequence of the very structure of the allegedly
restrained haulaway "market." According to the Complaint Ford
not only is the sole consumer in the relevant "market" but also
has sufficient economic power to dictate the terms (both price
and quantity) of its dealings with all its carriers — targets
and co-conspirators alike.*fn7 What plaintiffs really depict
is Ford (the moving force in the conspiracy) acting in its own
economic interest and terminating plaintiffs in order to lower
its own transportation costs — a procompetitive benefit
capable of being passed on via lower prices to the ultimate
purchasers of Ford cars (the market in which Ford competes with
all other car manufacturers). Accordingly plaintiffs' own
assertions demonstrate conclusively their termination is not
the type of anticompetitive injury the antitrust laws were
intended to forestall.*fn8
2. Conspiracy To Boycott Plaintiff's Assets
Count I's other alleged conspiracy — a collective refusal to
purchase plaintiffs' assets except at distress prices — must
also be dismissed for lack of "antitrust standing." Plaintiffs'
asserted injury unquestionably flowed from the procompetitive
aspects of the claimed boycott.*fn9 By allegedly precluding
plaintiffs from selling their business to existing Ford
carriers, this joint refusal to deal preserved plaintiffs as a
potential rival (or forced them to sell to a new entrant),
and thereby intensified competitive pressures in the relevant
Indeed in the relevant antitrust sense of examining the
effect on competition and not on competitors
(plaintiffs),*fn10 a purchaser from plaintiffs at distress
prices would (because of its own lower costs) be better able to
compete with the remaining haulaway carriers for Ford's
business.*fn11 Cf. Havoco, 626 F.2d at 558-59 (victim of
alleged conspiracy remained a market force as a potential
Thus neither conspiracy alleged in Count I states an
antitrust claim that can survive defendants' motion to
dismiss. Accordingly the entire count must be dismissed.
This Court has jurisdiction over plaintiffs' state law
counts only under the concept of pendent jurisdiction, for
complete diversity between the parties is lacking. Because
Count I has been dismissed, the remaining counts are no longer
pendent to any federal claim and must fall as well. United Mine
Workers v. Gibbs, 383 U.S. 715, 726, 86 S.Ct. 1130, 1139, 16
L.Ed.2d 218 (1966).
Ford's and Nu-Car's motions to dismiss are granted. Because
Count I could not possibly be repleaded to withstand Rule
12(b)(6) onslaught,*fn12 this entire action is dismissed
— Count I with prejudice and the other counts without