Gte Sylvania Incorporated v. Continental T v. Inc., a Corporation

Pursuant to a jury verdict in a private antitrust action, a judgment and an equitable decree were entered in favor of the appellees (hereinafter, collectively, “Continental”) and against the appellant (hereinafter “Sylvania”). On this appeal by Sylvania, the critical issue is whether the district judge erred in concluding, and instructing the jury accordingly, that, under the supposed rationale of United States v. Arnold, Schwinn & Co., 388 U.S. 365 , 87 S.Ct. 1856 , 18 L.Ed.2d 1249 (1967), Sylvania’s practice of fixing by agreement the locations from which Continental was authorized to sell Sylvania’s products was illegal per se under Section 1 of the Sherman Act. For the many reasons set forth below, we reverse.

I. Factual Background

Sylvania, a corporate subsidiary of General Telephone and Electric, manufactures and sells radios and television sets through its Home Entertainment Products Division. Though Sylvania emerged from World War II as one of the major manufacturers in the television industry, its share of the market never became large. In the post-war era, when only black and white television was the industry’s major product line, a single competitor, RCA,…

concur in whole or in part (dissenting).

With the majority factual statement so fraught with irrelevancies and weighted *1005 with factual issues decided adversely to appellant by the jury, 1 it is our firm belief that a separate statement would be helpful to a full understanding of the principal issue presented. We offer this at the risk of some' repetition.

FACTS

By 1962, Sylvania’s share of the television market had déclined to approximately one or two percent. It then changed its methods in an effort to obtain a larger share of the market. Under its new policy, Sylvania abandoned distribution through wholesalers and decided to sell only to selected retailers who would promote the Sylvania brand. It is undisputed that title to the television sets passed to these retailers. This plan, by limiting the number of franchises in a given area, would reduce intrabrand competition among retailers and serve as an incentive to carry and promote its product. Sylvania called this the “elbow room policy” and believed that these methods would allow it to improve its competitive position. In fact, under this new policy, it increased its market share to 5% in 1965, and, so it claims, this…

537 F.2d 980 1976-1 Trade Cases 60,848 GTE SYLVANIA INCORPORATED, Appellant, v. CONTINENTAL T.V., INC., a corporation, et al., Appellees. No 71--1705. United States Court of Appeals, Ninth Circuit. April 9, 1976. M. Laurence Popofsky (argued), of Heller, Ehrman, White & McAuliffe, San Francisco, Cal., for appellant. Lawrence A. Sullivan (argued), Berkeley, Cal., for appellees. OPINION Before CHAMBERS, BROWNING, DUNIWAY, ELY, HUFSTEDLER, WRIGHT, KILKENNY, CHOY, GOODWIN, WALLACE, and SNEED, Circuit Judges. * ELY, Circuit Judge: 1 Pursuant to a jury verdict in a private antitrust action, a judgment and an equitable decree were entered in favor of the appellees (hereinafter, collectively, 'Continental') and against the appellant (hereinafter 'Sylvania'). On this appeal by Sylvania, the critical issue is whether the district judge erred in concluding, and instructing the jury accordingly, that, under the supposed rationale of United States v. Arnold, Schwinn & Co., 388 U.S. 365 , 87 S.Ct. 1856 , 18 L.Ed.2d 1249 (1967), Sylvania's practice of fixing by agreement the locations from which Continental was authorized to sell Sylvania's products was illegal per se under Section 1 of…

(concurring and dissenting):

I concur in the judgment of the majority. I dissent from the stream of words used to arrive at the point of reversal. Naturally, this river of words brought forth elongated dissents.

One will note that the author of the majority opinion cites the Texas Law Review and other law review comments in his footnote No. 1. These are notes on this case. Law reviews used to wait until the judicial process in a case was complete before entering the fray. Now they chaperone us during the pendency of a case. This is their First Amendment right.

But if this practice of citing their current comment continues, then we shall be out lining up law reviews to support our views. After that we shall be taking the step of quoting the New York Times and the Chicago Tribune. And it will be an easy jump then to include in our opinions the current comments of the Abilene Bugle and Bis-bee’s Brewery Gulch Gazette.

concurs (dissenting):

It is the premise of the majority opinion that the jury was instructed that location clauses are per se illegal under the Sherman Act. Such an instruction, the majority argues: (1) is not supported by United States v. Arnold, Schwinn & Co., 388 U.S. 365 , 87 S.Ct. 1856 , 18 L.Ed.2d 1249 (1967); (2) is inconsistent with the rule permitting exclusive dealerships; and (3) is at odds with the purpose of the Sherman Act.

Judge Kilkenny’s opinion demonstrates that the majority’s premise is not substantiated by the record. The jury was not instructed that it is unlawful for a manufacturer to designate the location for which a dealer is franchised. Precisely to the contrary, it was instructed that location clauses are lawful. The case was submitted to the jury on the theory that a violation of the antitrust laws is to be found only if Sylvania conspired to control the territories in which its dealers resold merchandise purchased from Sylvania. This was the understanding of counsel for both parties.

Judge Kilkenny’s opinion further demonstrates that the legal theory reflected in the instructions is fully supported by Schwinn, and is consistent with the line of…

(dissenting):

I dissent solely on the ground that, as Judge Kilkenny demonstrates in parts I and II of his dissenting opinion, the case of United States v. Arnold, Schwinn & Co., 1967, 388 U.S. 365 , 87 S.Ct. 1856 , 18 L.Ed.2d 1249 is squarely in point. I agree with Judge Browning when he says that “[t]his should end the matter for an intermediate appellate court.” I express no views as to the conflicting policy arguments that appear in the respective opinions of Judges Browning, Ely and Kilkenny. I cannot, however, refrain from making one small observation. I am puzzled by the notion that because the courts are not very well equipped to decide between conflicting notions of economic policy, they should pick one side of such an argument and erect it into a rule of per se illegality.