Greyhound Rent-A-Car, Inc., a Florida Corporation v. The City of Pensacola, a Florida Municipality Dollar Rent-A-Car System, Inc.

Citations: 676 F.2d 1380; 1982 U.S. App. LEXIS 18868Docket: 81-5243

Court: Court of Appeals for the Eleventh Circuit; May 28, 1982; Federal Appellate Court

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Greyhound Rent-a-Car, Inc. appealed a jury verdict in an antitrust case against the City of Pensacola and Dollar Rent-a-Car Systems, Inc. regarding car rental concessions at the Pensacola Regional Airport. The City intended to award concessions to the top bidders, but Dollar contested Greyhound’s qualification based on its failure to meet specified performance criteria in the bidding process. These criteria included having a national credit card system, a national reservation system, "Rent-it here, Leave-it there" service, primary liability insurance, and at least five years of national-scale operation in the car rental business.

Dollar argued that Greyhound did not operate on a national scale, having locations in only five states, and questioned its compliance with other requirements. Greyhound contended that its operations across multiple states qualified as national scale. After deliberation, the City manager recommended disqualifying Greyhound based on its failure to meet the national scale requirement, asserting that the specifications were essential for ensuring high service standards and fair competition.

During a subsequent city council meeting, Greyhound claimed the national scale requirement was an unlawful restraint on competition, while Dollar's counsel indicated that enforcing the specifications would not incur antitrust liability for either party. The city attorney noted that case law defined a national operation as one conducted in over half the states. Ultimately, the court affirmed the jury's verdict against Greyhound.

The city council delayed awarding bids for two weeks to investigate potential liability issues. During this period, the city attorney discussed indemnification with Dollar's local counsel, who received authorization from Dollar's vice-president to enter an indemnification agreement to protect the City from lawsuits related to the rejection of Greyhound's bid. Subsequently, Dollar's local counsel confirmed his authority to indemnify the City for costs and damages if the contract was awarded to Dollar. On February 22, 1979, the council awarded concession contracts to several companies, including Dollar, without discussing indemnification.

Greyhound then filed a lawsuit under Section 1 of the Sherman Act, alleging that Dollar and the City conspired to exclude it from a car rental concession at the airport, claiming evidence of a boycott similar to that in Klor's, Inc. v. Broadway-Hale Stores, Inc. On appeal, Greyhound challenged the district court's jury instructions, which applied a rule of reason rather than a per se approach, and disputed two evidentiary rulings: the admission of the city attorney's testimony and the exclusion of an exhibit about Dollar's bid adjustments.

The court affirmed the judgment against Greyhound, concluding there was insufficient evidence of a contract, combination, or conspiracy between Dollar and the City under the Sherman Act. The court noted that Greyhound's failure to prove this element rendered its challenges to jury instructions and evidence moot. The ruling referenced United States v. Colgate Co., affirming that the Sherman Act does not restrict a trader's right to choose whom to deal with, emphasizing that the City's decision to refuse to deal with Greyhound was legitimate. Greyhound's assertion of a conspiracy was unsubstantiated by the evidence presented.

A contract, combination, or conspiracy under antitrust law involves an agreement to engage in anticompetitive conduct. The case presents three theories alleging conspiracy between the City and Dollar, none of which were substantiated. First, if Dollar had influenced the City to include national specifications in bid packages or to define "national scale" in a way that excluded Greyhound, Greyhound could have established a claim. However, testimony confirmed that the City had no discussions with bidders regarding specifications. The definition of "national scale" was independently developed by the city attorney, not influenced by Dollar.

Greyhound's primary argument centered on an indemnity agreement between Dollar and the City, suggesting it reflected a mutual commitment to exclude Greyhound in exchange for indemnification. However, this interpretation is unsupported by the agreement's language or the circumstances of the City's decision to disqualify Greyhound. The agreement did not bind the City to reject Greyhound's bid; it merely obligated Dollar to indemnify the City if it chose not to accept Greyhound's bid. Testimony indicated that City council members were unaware of the indemnity agreement during their voting process and were primarily motivated by the necessity of the national scale specification for service quality.

Consequently, the indemnity agreement does not demonstrate a coordinated effort by the City and Dollar to exclude Greyhound. The court upheld the district court's judgment favoring Dollar and the City, affirming that there was insufficient evidence of a contract, combination, or conspiracy under the Sherman Act.

The three remaining bidders for the City’s concession contracts were Hertz Corp., National Car Rental System, Inc., and Avis Rent-a-Car System, Inc., with minimum guaranteed revenues of $410,000, $365,484, $343,716, and other figures for different companies over a five-year period. Greyhound’s counsel cited a Federal Trade Commission consent decree that prohibits Hertz, National, and Avis from conspiring to obtain specific bid requirements, including a national credit card system and one-way rental service, among others. The requirement for operation "on a national scale" had not been previously defined, raising concerns among city officials about potential litigation related to the decision-making process.

The city attorney did not inform council members about an indemnity agreement prior to their vote, and the council meeting minutes reflect no discussion of indemnification. A Supreme Court ruling in Klor's established that a group boycott violates the Sherman Act when manufacturers conspire to restrict sales to a retail competitor. On appeal, Greyhound did not argue that the "national scale" requirement alone violates antitrust laws, nor did the court comment on any potential conspiracies related to trade restraints.

There was a dispute regarding Dollar's indemnity agreement with the City. The city attorney initially accepted a letter from Dollar's local counsel as sufficient evidence of indemnification, but later sought to formalize this agreement, which Dollar's vice-president refused to sign. Both parties testified they couldn't produce a copy of the proposed agreement. The court noted the existence of some form of understanding regarding indemnification, but did not determine its enforceability. The City admitted that Dollar agreed to indemnify it against potential litigation from Greyhound if its bid was rejected, but the court refrained from commenting on the legal implications of this obligation.