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National Auto Brokers Corp. v. General Motors Corp.

deciced: March 20, 1978.

NATIONAL AUTO BROKERS CORP., FRANK MAIORANA, ANTHONY MAIORANA, GENERAL AUTO SALES & LEASING, INC., DALE STRIMPLE; RALPH AJELLO, AS ADMINISTRATOR OF THE ESTATE OF E. LOUIS JAMELE, DECEASED; NABCOR OF EAST NEW YORK, INC., AND ALFRED J. YOUNG, SR. D/B/A A.J. YOUNG, SR. AUTO SALES, PLAINTIFFS-APPELLANTS,
v.
GENERAL MOTORS CORPORATION, FREDERIC G. DONNER, JAMES M. ROCHE, BOB BAIN CHEVROLET, PAUL BATT BUICK, INC., GLEN CAMPBELL CHEVROLET, INC., HAMISTER-GILLOGLY CHEVROLET, INC., PARAGON OLDSMOBILE, INC., NIAGARA FRONTIER AUTOMOBILE DEALERS ASSOCIATION, INC., AND GENERAL MOTORS ACCEPTANCE CORPORATION, DEFENDANTS-APPELLEES.



Appeal from a decision of the United States District Court for the Southern District of New York, Thomas P. Griesa, Judge, directing a verdict for appellees on the grounds that appellants failed to present a prima facie case with regard to claims of a conspiracy to boycott and the maintenance of a "whitelist" in violation of the antitrust laws. Affirmed.

Author: Mansfield

Before:

MOORE, SMITH*fn* and MANSFIELD, Circuit Judges.

MANSFIELD, Circuit Judge:

This case demonstrates that unsound ideas cannot be turned into a profit through frivolous antitrust claims and costly litigation. National Auto Brokers Corporation (Nabcor) and several of its affiliates*fn1 appeal from a judgment of the Southern District of New York dismissing their antitrust suit for $3.6 billion against General Motors (GM) and others,*fn2 following a directed verdict at the close of the plaintiffs' case, which was tried for more than six weeks before Judge Thomas P. Griesa and a jury.

The action was commenced in 1970 against some 63 defendants, including GM and various other major auto manufacturers, banks, auto dealers, Better Business Bureaus, and individuals, by the filing of a 93-page complaint charging a conspiracy in violation of the antitrust laws, including ยง 1 of the Sherman Act, to hamper Nabcor's efforts to obtain new automobiles for resale, and to restrain its competition in the sale of such cars.*fn3 As a result of serverances, this part of the case was tried only against GM and those defendants connected with or franchised by it. We have reviewed the lengthy trial record and agree with the court below that the plaintiffs failed completely to make out a prima facie case. Accordingly, we affirm the judgment of the district court, essentially for the reasons stated in Judge Griesa's thorough, well-reasoned opinion, 1976-2 Trade Cas. (CCH) P 61,211. Because no purpose would be served by repeating his careful analysis of the 1976-2 Trade Cas. (CCH) P 61,211. Because no purpose evidence, we limit ourselves to a general outline with particular reference to the gross inadequacies in the proof which mandated dismissal.

The case arises out of the unsuccessful efforts of Nabcor, beginning in 1966, to compete with manufacturer-franchised automobile dealers in the sale of new cars by itself franchising individual "brokers" to sell cars to the public. The brokers were to solicit new car orders and forward them to Nabcor. Nabcor, headed by appellants Frank and Anthony Maiorana, was to provide administrative services and cars needed by the brokers to fill their orders.*fn4 The scheme was predicated on the theory that since the brokers would not be selling out of showrooms, maintaining inventories or providing repair services, their overhead would be low or virtually non-existent, enabling them to undercut manufacturer-franchised dealers and thus attract a large volume of retail purchasers. Nabcor planned to fill its brokers' orders by purchasing cars as needed from regular manufacturer-franchised dealers. It expected that the prospects of high volume would induce these dealers to part with their cars at a small markup over their cost, which would enable Nabcor and its brokers to realize profits while undercutting the very dealers from whom the cars would be acquired.

The scheme proved a complete failure. Although Nabcor franchised approximately 145 brokers, from whom it received substantial cash payments, they failed to generate any significant number of new car orders. In four years the brokers submitted only 677 orders for GM cars. On December 10, 1970, this suit was instituted, seeking to shift the blame for appellants' failure to the defendants on antitrust law grounds.

Appellants first contend that beginning in 1966 GM conspired with its independent franchised dealers to impede Nabcor's efforts to obtain from the dealers GM cars for its brokers; the parties have referred to this aspect of the case as the "blacklist theory." Second, they assert that GM maintained an illegal "whitelist" under which it made quantities of cars - so-called "fleet allotments" - available to some favored high-volume customers (i.e., purchasers of 10, 20, or more cars for their own use, such as car leasing and rental companies) but not to Nabcor. The remaining individual appellants, the Maioranas and several brokers, seek damages allegedly resulting from the "blacklist" and "whitelist" - including compensation for their efforts in promoting Nabcor's operations and lost profits.

Upon this review, since the case is before us on appeal from a directed verdict, F.R.Civ.P. 50(a), all issues of credibility must be resolved in favor of appellants, Brady v. Southern Ry. Co., 320 U.S. 476, 479-80, 88 L. Ed. 239, 64 S. Ct. 232 (1943). At the same time, we need not overlook uncontradicted evidence unfavorable to appellants.

"If the facts and inferences point so strongly and overwhelmingly in favor of one party that the Court believes that reasonable men could not arrive at a contrary verdict, granting of the motions is proper. On the other hand, if there is substantial evidence opposed to the motions, that is, evidence of such quality and weight that reasonable and fair-minded men in the exercise of impartial judgment might reach different conclusions, the motions should be denied, and the case submitted to the jury. A mere scintilla of evidence is insufficient to present a question for the jury." Epoch Producing Corp. v. Killiam Shows, Inc., 522 F.2d 737, 742-43 (2d Cir. 1975), cert. denied, 424 U.S. 955, 47 L. Ed. 2d 360, 96 S. Ct. 1429 (1976), quoting Boeing Co. v. Shipman, 411 F.2d 365, 374 (5th Cir. 1969).

Turning first to appellants' boycott claim, the record, which includes Nabcor's books, publications and the testimony of its president, reveals clearly that Nabcor received substantially all of the GM automobiles it ordered during the relevant period (from December 1966 to December 1970) and that it had no unusual difficulty in obtaining GM automobiles for delivery to its brokers. Of approximately 553 GM cars ordered by Nabcor from GM dealers during this period, from which some 81 may be deductible for cancellations and a certain Cadillac order claimed to have been placed in 1966, it received a minimum of 435 and a maximum of 503 cars. Indeed, during the last 3 1/2 years of the relevant period it failed to receive only two GM vehicles, neither of which failure appears to be relied upon by appellants as proof of the alleged conspiracy.*fn5 Nabcor published a statement in 1969 and 1970 that it had "experienced no difficulty in supplying its brokers with automobiles, nor does it anticipate any difficulty in the future." Its president testified that if purchases from one GM dealer were terminated, it "could always get another dealer . . . could always get a source of supply if it were stopped at one particular place." Nabcor further represented in a 1968 publication that it was "not only welcomed by a majority of the rapidly growing auto-buying public but by manufacturers as well . . . " Moreover, most GM-franchised dealers who were called as witnesses by Nabcor testified that they had not refused to sell GM cars to it. Although a few dealers had refused to do so, Nabcor was always able to obtain alternative sources of supply. The record reveals no substantial evidence, direct or circumstantial, that the refusals on the part of a few dealers to sell GM cars to Nabcor were directed, inspired, participated in, or approved by GM*fn6 or any of the other appellees.*fn7

Turning to Nabcor's contention that GM refused to permit dealers to sell cars to Nabcor out of their fleet allotments, there likewise is no substantial supporting proof. Although the details of the "fleet allotment" system varied somewhat among GM's various divisions, each appears to have made an effort to allocate its production among the many independent GM dealers in order to assure that if shortages in new cars should ever develop, the supply would be spread equitably. With regard to sales to the general public, each GM dealer was assured access to a certain minimum number of cars for retail sales. At the same time, GM set aside some percentage of its production - the "fleet allotments" - for sale to large purchasers of cars for their own use (e.g., car rental companies). By securing a fleet allotment for a large order of cars, a dealer could avoid having to satisfy a bulk purchaser from stocks earmarked for individual consumers.

Since Nabcor was purchasing cars for resale rather than for its own use, it may not have qualified for access to fleet allotments. But regardless of whether it qualified, the record is barren of any evidence that Nabcor was unable to obtain any GM cars because of any dealer's inability to secure a fleet allotment for it from GM or that Nabcor experienced any unusual patterns of delay in obtaining delivery of cars, much less that any delays were attributable to fleet allotment problems. Thus, ...


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