Roesch, Inc. And Marketing Division, Inc. v. Star Cooler Corporation, a Missouri Corporation Hussmann Refrigeration, Inc. And Tour Ice Midwest, Inc.

Citations: 671 F.2d 1168; 1982 U.S. App. LEXIS 21285Docket: 81-1562

Court: Court of Appeals for the Eighth Circuit; March 4, 1982; Federal Appellate Court

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Roesch, Inc. and its subsidiary, Marketing Division, Inc., appeal a directed verdict favoring Star Cooler Corporation, Tour Ice Midwest, Inc., and Hussmann Refrigeration, Inc. in a conspiracy case alleging price-fixing of ice merchandisers, in violation of the Sherman Act. The Eighth Circuit Court of Appeals, led by Judge Stephenson, affirms the district court's decision. 

Roesch, engaged in manufacturing and selling ice merchandisers, had a verbal agreement with Star to sell 'private label' ice merchandisers, which were modified to appear as Roesch products. Roesch received the lowest pricing available from Star, comparable only to that of Star's stocking distributors, yet only purchased units it had pre-sold. Following the agreement, Roesch began selling these products as 'Star Maid' at prices below the recommended wholesale price. 

Star became aware of Roesch's pricing strategies through communications from Hussmann and Tour Ice sales representatives. Subsequently, Roesch's agreement with Star was terminated after approximately eleven days of sales. The court concluded that there was insufficient evidence to infer a conspiracy, thus upholding the directed verdict in favor of the defendants.

On August 9, 1980, Roesch initiated litigation against Star Cooler Corp., alleging a conspiracy with Tour Ice and Hussmann to terminate its agreement as part of a price-fixing scheme, violating the Sherman Act. After a six-day jury trial, the district court ruled that Roesch did not establish a prima facie case, directing verdicts in favor of Star, Hussmann, and Tour Ice. The court found no evidence of a conspiracy to terminate the agreement and concluded that Roesch failed to demonstrate any intent or effect of unreasonably restraining trade.

Roesch contended that directed verdicts in antitrust cases should be rare; however, the court emphasized its obligation to do so when a plaintiff lacks sufficient evidence. The court highlighted the importance of viewing evidence favorably for the non-moving party, allowing all legitimate inferences without credibility assessments. If no reasonable disagreement exists on the case's resolution, the court should decide as a matter of law.

Price fixing is per se illegal under the Sherman Act, but Roesch needed to prove that Star's termination of the agreement resulted from a conspiracy. If Star acted independently, even based on Roesch’s pricing, it would not constitute a violation. The court reiterated that a manufacturer has the discretion to choose its business partners.

Roesch attempted to infer a conspiracy from evidence that Tour Ice and Hussmann employees complained to Star about Roesch's low prices. However, the evidence indicated that these complaints did not constitute a request for action against Roesch.

Mr. Larocca from Hussmann informed Mr. Smith of Star that Roesch was selling Hussmann's merchandise at lower prices to previous customers, seeking clarification on the situation. Mr. Smith responded that Roesch was not adhering to its agreement, but Star had no authority over Roesch's pricing. This call did not request Roesch's termination. 

The majority legal view, which is adopted, asserts that customer complaints about price-cutting by distributors do not imply a conspiracy under section 1, as these complaints are typical business occurrences and do not indicate illegal collusion. Consequently, if the calls to Star are deemed complaints, they fail to meet Roesch's burden of proving a conspiracy.

Roesch contends that Star's pricing recommendations indicate a price-fixing conspiracy; however, such recommendations are lawful unless supported by evidence of price monitoring or coercive practices, which is absent in this case. Therefore, Star's suggested resale prices do not imply conspiracy.

The evidence presented does not support a conspiracy inference among the defendants. The jury may only draw reasonable inferences from the evidence, not engage in speculation. The district court rightly prevented speculation on conspiracy due to insufficient evidence. Additionally, Roesch's other arguments regarding the exclusion of certain documents and testimonies are without merit, leading to the affirmation of the district court's decision.

The decision was affirmed by Judge George Howard, Jr. of the United States District Court for Arkansas, with a note that appellants Roesch and Marketing Division, Inc. are treated as one entity. The opinion is documented at 514 F.Supp. 890 (E.D.Mo.1981). Tour Ice serves as a distributor and franchisee of Star ice merchandisers, while both Hussmann and Star are subsidiaries of Hussmann Refrigerator Company, with Hussmann competing in the sale of Star products. Stocking distributors, like Hussmann, make initial purchases, maintain inventories, and manage service and warranty claims.

Directed verdicts can be used to terminate frivolous treble damage lawsuits when injuries arise from standard business risks. Roesch's claim that a phone call from Star's Mr. Rehder implied a threat of termination for underselling was dismissed, as testimony indicated no threats were made, only a suggestion to adhere to retail pricing. Additionally, a recorded conversation between Roesch's Mr. Voges and Star's Mr. Smith did not provide evidence of a conspiracy, lacking references to other distributors or agreements. The district court appropriately excluded dealer agreements related to minimum pricing from prior management, which were rendered void after Hussmann's acquisition of Star in 1978, as Roesch's allegations of illegal activity began in the summer of 1979.