Merit Motors, Inc., et al., Appellants, v. Chrysler Corporation et al, 569 F.2d 666 (D.C. Cir. 1977)

In this antitrust action appellants, two Chrysler dealers, appeal from a District Court order granting summary judgment to appellees, Chrysler Corporation and several of its subsidiaries.¹  The complaint filed in the District Court alleges that various programs instituted by Chrysler in the early 1960's to increase Chrysler's sales of automobiles to "fleet purchasers" (customers who purchase more than ten vehicles within a 12-month period) violate Sections 1 and 2 of the Sherman Act, 15 U.S.C. §§ 1, 2 (1970), and Section 2(a), (d), and (e) of the Robinson-Patman Act, 15 U.S.C. § 13(a), (d), (e) (1970). Appellants seek treble damages and injunctive relief under Sections 4 and 16 of the Clayton Act, 15 U.S.C. §§ 15, 26 (1970). The District Court granted summary judgment for appellees on each count of the complaint and then concluded its opinion by finding that appellants had not shown sufficient injury to sustain a private action under the Clayton Act. Merit Motors, Inc. v. Chrysler Corp., 417 F. Supp. 263 (D.D.C. 1976). Since we agree that summary judgment was proper on the ground of lack of injury²  as to all claims alleged in the complaint, we find it unnecessary to reach the other issues covered in the District Court's opinion or raised on this appeal.

Under Rule 56(b) of the Federal Rules of Civil Procedure, a defending party "may, at any time, move with or without supporting affidavits for a summary judgment in his favor as to all or any part" of a claim against him. Rule 56(c) provides that "(t)he judgment sought shall be rendered forthwith if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." The burden of proving that there is no genuine issue as to any material fact is on the moving party, but once the moving party has submitted a properly supported motion for summary judgment, Rule 56(e) requires the opposing party to produce at least some credible evidence beyond the pleadings in response.³ 

Although the Supreme Court has cautioned against granting summary judgments too quickly in complex antitrust litigation,⁴  the Court has also explicitly refused to "read (Rule 56(e)) out of antitrust cases and permit plaintiffs to get to a jury on the basis of the allegations in their complaints, coupled with the hope that something can be developed at trial in the way of evidence to support these allegations * * *." First National Bank of Arizona v. Cities Service Co., 391 U.S. 253, 289-290, 88 S. Ct. 1575, 1593, 20 L. Ed. 2d 569 (1968). In First National Bank the Court affirmed a summary judgment for the defendants in an antitrust suit on the ground that a jury could not reasonably infer a conspiracy from the facts on which the plaintiff relied in light of the overwhelming evidence to the contrary introduced by the defendants. In justifying its decision the Court explained:

While we recognize the importance of preserving litigants' rights to a trial on their claims, we are not prepared to extend those rights to the point of requiring that anyone who files an antitrust complaint setting forth a valid cause of action be entitled to a full-dress trial notwithstanding the absence of any significant probative evidence tending to support the complaint.

391 U.S. at 290, 88 S. Ct. at 1593.⁵ 

In considering whether to grant summary judgment in this case the District Court relied not only on First National Bank, but also on the length of time (nearly six years) and the "ample opportunities" for discovery that appellants had "to unearth evidence to support their allegations."⁶  We also find these factors relevant to our determination of the propriety of affirming summary judgment in this case.

II. THE SALES PROGRAMS ON WHICH THIS CASE IS BASED

During the entire period relevant to this suit the fleet market for automobiles, like the automobile market as a whole, has been dominated by General Motors and Ford.⁷  Around 1962 Chrysler took steps to increase its sales by improving its image and its product and by introducing special programs designed to attract more business from fleet purchasers. These special fleet programs are the primary target of appellants' complaint. There is no dispute as to the general outline of the practices appellants attack; they may be briefly summarized as follows:⁸ 

After the fleet purchasers buy their cars from Chrysler dealers, Chrysler grants subsidies (also called allowances or rebates) directly to the fleet purchasers. These subsidies have taken various forms, from a set rebate that is sent when the car is purchased (front end allowance) to a guarantee that the difference between the cost of a new Chrysler and its resale value will not be more than the comparable difference for Ford or General Motors cars (rear end allowance). Chrysler submitted uncontradicted evidence to the effect that these subsidy programs were established because the wholesale prices of new Chryslers were higher than the wholesale prices of comparable Ford and GM cars and the trade-in values of used Chryslers were lower than the trade-in values of Ford and GM cars.⁹ 

Chrysler has established a subsidiary corporation, Chrysler Leasing Corporation, which buys cars from Chrysler at the same prices charged to the dealers and then leases these cars to major fleets most notably Avis and Hertz for terms of four to eight months. When the leases end, the cars are reconditioned and auctioned (first to Chrysler dealers) in a way that disperses them around the country for resale.¹⁰ 

C. Special "Benefits" Given to Large Fleet Purchasers

Chrysler has assigned special account executives to the largest fleet purchasers and has installed special equipment and procedures to facilitate their ordering of Chrysler cars. Chrysler has also entered into special promotional and advertising agreements with Avis in connection with Avis' leasing of Chrysler cars.

D. Characteristics of Chrysler Distribution System

Appellants allege that several aspects of Chrysler's dealings with its dealers put illegal pressures on the dealers to sell at lower prices to fleets. These aspects include:

1. Minimum Sales Responsibility (MSR). Chrysler dealers have an obligation in their franchise to make a certain minimum number of sales per year. A dealer may count sales to fleet purchasers toward meeting his MSR.

2. Regional Representatives. Chrysler maintains representatives "in the field" who, among their other duties, encourage the dealers to make sales to fleet purchasers.

3. Factory Dealerships. Chrysler itself owns or controls some dealerships and thus has influence over the prices charged to fleets by these dealerships.

At least in part as a result of these programs,¹¹  Chrysler was able to increase its share of the total fleet market from 10.8% In 1962 compared to 41.1% For Chevrolet, 27.2% For Ford, and 20.9% For others (including other General Motors and Ford products but no other Chrysler products) to 21.2% In 1974 compared to 25.1% For Chevrolet, 23.9% For Ford, and 29.8% For others.¹²  Chrysler's share of the domestic retail (non-fleet) automobile market also increased during these years, from 9.8% In 1962 to between 16 and 18% In the years 1965-1972.¹³ 

In order to make out a private cause of action under the Clayton Act, a plaintiff must prove that he has been or will be injured by some violation of the antitrust laws.¹⁴  Applying the standard defined in First National Bank to the record in this case, we agree with the District Court that appellants' response to appellees' well-supported motion for summary judgment fails to raise any genuine issue of material fact on the question of injury.

Appellants' allegations that they are harmed by Chrysler's practices rest on two theories. First appellants allege that Chrysler uses certain aspects of its distribution system the minimum sales responsibility, the regional agents, and the factory dealerships to pressure dealers to sell to fleet purchasers at prices lower than the dealers could otherwise negotiate. In six years of discovery, however, appellants failed to produce credible evidence of any kind from any dealer (including appellants themselves)¹⁵  supporting the inference that Chrysler has used these programs to coerce dealers to charge lower prices to fleet purchasers. In support of its motion for summary judgment Chrysler submitted uncontradicted affidavits and depositions indicating that its dealers retain complete discretion in pricing.¹⁶  More importantly, the record contains unanswered evidence that the real "pressure" on the dealers to charge lower prices to fleet purchasers results, not from Chrysler's programs, but from the sophistication and buying power of the fleet purchasers and the competition of General Motors and Ford.¹⁷ 

Recognizing the lack of support in the record for their first theory of injury, appellants rely almost exclusively¹⁸  on their second theory: the "inherent" economic effects of the subsidies and other special programs as set forth in the report of appellants' expert, Professor Richard Staelin.¹⁹  Staelin's report asserts that, according to "standard economic theory," these programs inevitably harm the Chrysler dealers in three ways. First, Staelin asserts that the lower prices to the fleet purchasers mean that more new cars will be sold to the fleets, and many of these cars end up soon on the used car market. The presence of more late model used Chryslers on the market allegedly depresses the retail prices for both new and used Chryslers. Second, Staelin claims that if Chrysler could not give the subsidies it would have to lower its wholesale prices to its dealers to maximize its profits. In Staelin's view the subsidy programs thus have the effect of "squeezing" dealers between higher wholesale prices and lower retail prices. Third, Staelin notes that many fleet purchasers are long-term leasing companies and claims that these companies are in direct competition with Chrysler dealers selling new cars. He then asserts that the dealers are injured in their competition against these leasing companies because the dealers do not receive the subsidies and other benefits granted to the leasing companies.

In its motion for summary judgment Chrysler attacked Staelin's theories on several fronts. Using its lengthy deposition of Staelin, Chrysler argued forcefully in the District Court that his theories were abstract speculation and that by his own admission he was unfamiliar with the record in this case.²⁰  Furthermore, Chrysler asserted that the evidence in the record contradicted rather than supported all of Staelin's predictions of "inevitable effects." Appellants' depositions of Chrysler executives revealed that an essential aspect of the fleet programs was to disperse the used cars returned to the market by the fleets so that they would have no significant impact on prices in any particular area.²¹  The president of Chrysler stated that, given Chrysler's costs of production, eliminating the subsidy programs would result in increased, rather than decreased, wholesale prices to dealers.²²  Staelin himself admitted that, for all he knew, eliminating the subsidy programs might force Chrysler to "close its doors."²³  In response to Staelin's claim that Chrysler dealers are injured because discriminatory discounts and benefits are available to fleet purchasers in the long-term leasing business, Chrysler produced uncontradicted evidence that the same subsidies are available to any Chrysler dealer who chooses to enter the leasing business and that Chrysler offers special promotional advantages to encourage its dealers to enter the leasing market.²⁴  Finally, Chrysler pointed out that near the end of his deposition Professor Staelin had conceded that he believed Chrysler dealers "are better off now profit-wise than they were in '61 or '62, * * * that they are earning more on the average as a return on investment."²⁵ 

After considering Chrysler's motion for summary judgment and appellants' response, the District Court dismissed Staelin's theory "since his opinion is based solely on speculations and hypotheses and is unsubstantiated by any evidence in the record * * *." 417 F. Supp. at 272. Consequently, the court held that appellants had "failed to submit any credible evidence that they suffered individual injury as a proximate result of the introduction of the fleet allowance programs." Id.

On appeal appellants attempt to salvage their expert's opinion by relying on cases applying Rule 703 of the Federal Rules of Evidence, adopted in 1975.²⁶  This rule was intended to broaden the acceptable bases of expert opinion, but it was not intended, as appellants seem to argue,²⁷  to make summary judgment impossible whenever a party has produced an expert to support its position. Even Rule 703 requires that the grounds relied on by an expert must be "a type reasonably relied upon by experts in the particular field in forming opinions or inferences upon the subject." While appellants claim that Staelin has merely applied "standard economic theory" to "a factual basis which is uncontroverted,"²⁸  it is obvious that Staelin makes unsupported assumptions about the elasticities of demand in various markets²⁹  and that he virtually ignores the impact of the dominant forces in the automobile market: General Motors and Ford.³⁰  To hold that Rule 703 prevents a court from granting summary judgment against a party who relies solely on an expert's opinion that has no more basis in or out of the record than Staelin's theoretical speculations would seriously undermine the policies of Rule 56. We are unwilling to impose the fruitless expenses of litigation that would result from such a limitation on the power of a court to grant summary judgment. Cf. Logsdon v. Baker, 170 U.S.App.D.C. 360, 517 F.2d 174 (1975) (per curiam) .

The cases cited by appellants accepted "reliable statistical model(s)"³¹  prepared by experts "through the intelligent application of statistical and computer techniques"³²  as mechanisms to estimate the impact of illegal actions on individual plaintiffs. While appellants in this case claim that their expert has "constructed a reliable statistical marketing model to explain and demonstrate the impact of Appellees' subsidy program on the market in which Appellants and other Chrysler dealers operate," reply brief for appellants at 7, this model has never been produced,³³  and we are not willing to send this case to trial on the mere promise that a more substantial showing will be made there. Appellants had nearly six years for discovery and for development and presentation of their expert's theories before the hearing on the summary judgment motion. The District Court allowed wide discovery, including depositions of several top executives of Chrysler Corporation and production of confidential information on profitability and market strategy. Under these circumstances, we agree with the District Court and with the Supreme Court in First National Bank that appellants should not be permitted "to get to a jury on the basis of the allegations in their complaint (), coupled with the hope that something can be developed at trial in the way of evidence to support those allegations * * *." 391 U.S. at 289-290, 88 S. Ct. at 1593.

Accordingly, the order of the District Court granting summary judgment for appellees is

Affirmed.