                                                                                                                           Opinions of the United
2004 Decisions                                                                                                             States Court of Appeals
                                                                                                                              for the Third Circuit


5-25-2004

2660 Woodley Road v. ITT Sheraton Corp
Precedential or Non-Precedential: Precedential

Docket No. 02-1297




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                      PRECEDENTIAL       WOODLEY ROAD ASSOCIATES,
                                                    INC.;
IN THE UNITED STATES COURT OF            JOHN HANCOCK MUTUAL LIFE
           APPEALS                          INSURANCE COMPANY;
     FOR THE THIRD CIRCUIT              *SUM ITOMO LIFE REALTY (N.Y.)
                                                    INC.

         Nos. 02-1297/1418                           Appellants No. 02-1418

                                                           v.
  2660 WOODLEY ROAD JOINT
         VENTURE;                        ITT SHERATON CORPORATION;
 WOODLEY ROAD ASSOCIATES,                    SHERATON OPERATING
            INC.;                               CORPORATION;
 JOHN HANCOCK MUTUAL LIFE                  WASHINGTON SHERATON
    INSURANCE COMPANY;                         CORPORATION**
*SUM ITOMO LIFE REALTY (N.Y.)
            INC.                          (*Dismissed per the Clerk Order of
                                                      5/23/02)
                 v.                      (**Dismissed per the Court Order of
                                                      9/25/02)
 ITT SHERATON CORPORATION;
     SHERATON OPERATING
        CORPORATION;                      On Appeal From the United States
   WASHINGTON SHERATON                              District Court
       CORPORATION**                         For the District of Delaware
                                            (D.C. Civ. No. 97-cv-00450)
     ITT Sheraton Corporation,           Chief District Judge: Hon. Joseph J.
 Sheraton Operating Corporation and                   Farnan, Jr.
 Washington Sheraton Corporation,**

           Appellant No. 02-1297          ARGUED: FEBRUARY 13, 2003

  (*Dismissed per the Clerk Order of          BEFORE:ALITO and McKEE,
              5/23/02)                 Circuit Judges, and SCHWARZER,*
 (**Dismissed per the Court Order of   Senior District Judge
              9/25/02)

                                            *
                                            Honorable William W. Schwarzer,
                                       Senior United States District Judge,
  2660 WOODLEY ROAD JOINT              Northern District of California, sitting by
         VENTURE;                      designation.
         (Filed: May 25, 2004)                        We are asked to review the
                                               propriety of damage awards, including an
ANDREW L. FREY (ARGUED)                        award for punitive damages, in an action
Mayer, Brown, Rowe & Maw                       for commercial bribery under § 2(c) of the
1675 Broadway                                  Robinson-Patman Act, racketeering under
New York, NY 10019                             the Racketeer Influenc ed Co rrupt
                                               Organization Act (“RICO”), breach of
EVEN M. TAGER                                  contract and related state law claims. We
ROBERT L. BRONSTON                             hold that the plaintiff can not maintain an
Mayer, Brown, Rowe & Maw                       action under § 2(c) of the Robinson-
1909 K Street, N.W.                            Patmam Act because it has not established
Washington, D.C. 20006                         antitrust standing. We also hold that the
                                               record does not support portions of other
Attorneys for Appellants/Cross-Appellees       damage awards, including the award for
ITT Sheraton Corporation and Sheraton          punitive damages, as explained more fully
Operating Corporation                          below. Accordingly, we will affirm in part
                                               and reverse in part, and remand for further
THOMAS A. ARENA (ARGUED)                       proceedings consistent with this opinion.
WILLIAM E. WALLACE, III
                                                I. FACTUAL AND PROCEDURAL
TIMOTHY P. WEI
                                               BACKGROUND
Milbank, Tweed, Hadley & McCloy LLP
One Chase Manhattan Plaza                              John Hancock Life Insurance
                                               Company, 2660 Woodley Road Joint
New York, NY 10005                             Venture and Woodley Road Associates,
                                               Inc. (collectively referred to as “Hancock”)
Attorneys for Appellees/Cross-Appellants       together owned the Sheraton Washington
2660 Woodley Road Joint Venture;               Hotel (the “Hotel”). In September 1979,
John Hancock Mutual Life Insurance             Hancock entered into a Management
Company;                                       Agreement under which Sheraton agreed
and Sumitomo Life Realty (N.Y.) Inc.           to act as Hancock’s agent in managing the
                                               Hotel’s operations. In return, Sheraton
                                               received a percentage of the Hotel’s gross
                                               revenue and a share of its net cash flow.
      OPINION OF THE COURT
                                                       The suit arises from an arrangement
                                               known as the “Sheraton Purchasing
                                               Resource” program (the “SPR”) that was
                                               initiated pursuant to the terms of the
                                               Management Agreement. Pursuant to the
McKEE, Circuit Judge.
                                               terms of the SPR program, Sheraton


                                           2
negotiated large-volume discounts with             profiting from providing Workers’
vendors seeking to supply Sheraton-                Compensation insurance, permitting
managed hotels. Sheraton then required             excessive numbers of complimentary
the vendors to add a surcharge to the price        rooms, and breaching other unspecified
billed to the individual hotels for each           contractual duties.
purchase. However, the surcharge was not
                                                           Hancock’s suit proceeded to trial
itemized, or even disclosed, on any bills or
                                                   where a jury found for Sheraton on
invoices that vendors sent to individual
                                                   Hancock’s RICO claim, but found for
hotels. Rather, the surcharge was remitted
                                                   Hancock on its Robinson-Patman Act
directly to Sheraton in the form of a
                                                   claim. The jury also found for Hancock on
“rebate.” The Management Agreement
                                                   several of its state law claims, including
provided that Sheraton was entitled to be
                                                   claims that Sheraton had breached the
reimbursed for the costs of providing these
                                                   Management Agreement with regard to
services. Sheraton claimed that these
                                                   purchasing services, and providing
rebates reimbursed it for the centralized
                                                   Workers Compensation insurance. The
purchasing services it provided under the
                                                   jury further found in favor in Hancock on
SPR program as well as associated
                                                   its breach of fiduciary duty claim. The
overhead costs.
                                                   jury concluded that Sheraton breached an
        The Management Agreement                   implied duty of good faith and fair dealing,
between Sheraton and Hancock remained              and that Sheraton was liable for its
in effect until 1993, when differences             misrepresentations to Hancock. The jury
between the parties led to its termination.        awarded damages of $750,000 on the
Thereafter, Hancock filed this lawsuit. In         Robinson-Patman Act claim (subsequently
its complaint, Hancock alleged: violations         trebled by the court), a total of
of § 2(c) of the Robinson-Patman Act, 15           $10,732,000 on the breach of contract
U.S.C. § 13(c); violations of RICO, 18             claims, $1,100,000 on the tort claims, and
U.S.C. § 1961; and state law claims of             $37,500,000 in punitive damages. The
breach of contract, breach of fiduciary            district court denied Sheraton’s motion for
duty, and breach of the implied duty of            judgment as a matter of law but granted a
good faith and fair dealing; as well as            remittitur thereby reducing the punitive
fraud, and intentional or negligent                damages to $17,415,000. The district
misrepresentation. Hancock also claimed            court then entered judgment in favor of
that Sheraton failed to properly act as its        Hancock in the total amount of
agent in operating its reservation system,         $31,497,000, but denied Hancock’s motion
failing to limit usable denials,1 improperly       for attorneys’ fees and taxation of costs
                                                   without prejudice. Sheraton appealed

  1
   According to Sheraton, a usable denial
occurs when a potential guest is denied a          a v a i la b l e . Sheraton’s Br.        as
reservation when a room is actually                appellant/cross-appellee, at 13.

                                               3
from the judgment, and Hancock cross-                          purchase of goods, wares, or
appealed from the remittitur.2 For the                         merchandise, either to the
reasons that follow, we will affirm in part                    other party to such
and reverse in part.                                           transaction or to an agent,
                                                               representative, or other
               II. DISCUSSION
                                                               intermediary therein where
A.   ROBINSON-PATMAN                          ACT              such intermediary is acting
CLAIM                                                          in fact for or in behalf, or is
                                                               subject to the direct or
          Hancock’s Antitrust Standing
                                                               indirect control, of any party
       Sheraton renews its argument that                       to such transaction other
Hancock lacks antitrust standing to bring a                    than the person by whom
claim under § 2(c) of the Robinson-                            such compensation is so
Patman Act.3 We must address that issue                        granted or paid.
before addressing the merits of the appeal
or cross-appeal.
                                                        15 U.S.C. § 13(c). “Congress enacted
      Section 2(c) of the Robinson-
                                                        section 2(c), the Act’s brokerage
Patman Act provides:
                                                        provision, primarily to curb one particular
          It shall be unlawful for any                  abuse by large chain store buyers, namely
          person engaged in                             the use of ‘dummy’ brokerage fees as a
          commerce, in the course of                    means of securing price rebates.”
          such commerce, to pay or                      Environmental Tectoni cs v . W.S .
          grant, or to receive or                       Kirkpatrick, Inc., 847 F.2d 1052, 1066 (3d
          accept, anything of value as                  Cir. 1988) (citation omitted). This concern
          a commission, brokerage, or                   arose from large stores using their
          other compensation, or any                    economic dominance to force sellers to
          allowance or discount in                      pay a fee for doing business. “The large
          lieu thereof, except for                      stores required the sellers to pay a
          s e r v ic e s r e n d e r e d in             ‘brokerage’ to persons employed by the
          connection with the sale or                   buyers. These persons had rendered no
                                                        service, and would simply pay over the
  2
                                                        commissions to their em ploye rs.”
    We have jurisdiction under 28 U.S.C.                Seaboard Supply Co. v. Congoleum Corp.,
§ 1291.                                                 770 F.2d 367, 371 (3d Cir. 1985).
      3
     The Robinson-Patman Act of 1936                          However, Hancock’s § 2(c) claim is
was enacted as an amendment to the                      not a dummy brokerage claim. Rather,
Clayton Act. Great Atlantic & Pacific Tea               Hancock has fashioned its § 2(c) action as
Co. v. Federal Trade Commission, 106
F.2d 667, 669 (3d Cir. 1939).

                                                    4
a   comm ercial      bribery    claim. 4         Surprisingly, the Supreme Court has never
                                                 decided a § 2(c) commercial bribery case.
                                                 However, in dicta in Federal Trade
    4                                            Commission v. Henry Broch, Inc., 363
    Sheraton insists that the SPR program
                                                 U.S. 166 (1960), the Court noted that §
was not commercial bribery because the
                                                 2(c) does encompass commercial bribery.
rebates simply served to compensate it for
                                                 Id. at 169 n.6 (“And although not
the costs it incurred in operating the
                                                 mentioned in the Committee Reports, the
program.      Nevertheless, it accepts
                                                 debates on the bill show clearly that § 2(c)
Hancock’s characterization of the SPR
                                                 was intended to proscribe other practices
program as commercial bribery for
                                                 such as the ‘bribing’ of a seller’s broker by
purposes of this appeal.
                                                 the buyer.”) (citation omitted). 5 Similarly,
       As a general principle, a critical
element of commercial bribery is the
breach of the duty of fidelity.       For
example, the Model Penal Code provides:                  purportedly disinterested
                                                         adjudicator or referee.
        Commercial Bribery and
        Breach of Duty to Act                            (2) A person who holds
        Disinterestedly.                                 himself out to the public as
                                                         being engaged in the business
        (1) A person commits a                           of making disinterested
        misdemeanor if he solicits,                      selection, appraisal, or
        accepts or agrees to accept any                  criticism of commodities or
        benefit as consideration for                     services commits a
        knowingly violati ng or                          misdemeanor if he solicits,
        agreeing to violate a duty of                    accepts or agrees to accept any
        fidelity to which he is subject                  benefit to influence his
        as:                                              selection, appraisal or
        (a) partner, agent, or employee                  criticism.
        of another;                                      (3) A person commits a
        (b) trustee, guardian, or other                  misdemeanor if he confers, or
        fiduciary;                                       offers or agrees to confer, any
        (c) lawyer, physician,                           benefit the acceptance of
        accountant, appraiser, or other                  which would be criminal
        professional adviser or                          under this Section.
        informant;
        (d) officer, director, manager           M ODEL P ENAL C ODE § 224.8. See United
        or other participant in the              States v Dischner, 960 F.2d 879 (9th Cir.
        direction of the affairs of an           1992).
        incorporated or unincorporated
                                                     5
        association; or                              In Broch a manufacturer sold apple
        (e) arbitrator or other                  concentrate at a price of $1.30 a gallon.

                                             5
in dicta in California Motor Transport             Although we once expressed skepticism
Co. v. Trucking Unlimited, 404 U.S. 508,           about “whether Congress intended to
513 (1972), the Court again noted that             sweep commercial bribery within the
“bribery of a public purchasing agent may          ambit of § 2(c),” Seaboard Supply, 770
constitute a violation of § 2(c) of the            F.2d at 371, we have since agreed that
Clayton Act, as amended by the Robinson-           “commercial bribery is actionable under
Patman Act.” In addition, a number of              2(c).” Environmental Tectonics, 847 F.2d
courts of appeals have held that § 2(c)            at 1066.
encompasses commercial br ib er y. 6
                                                          Nevertheless, although § 2(c) of the
                                                   Robinson-Patman Act defines certain
The manufacturer sold through a broker             conduct as illegal, it does not create a
and paid the broker a commission of 5%.            private right of action to sue for damages
One buyer would not pay more than $1.25            resulting from violations of the Act.
for the concentrate and the manufacturer           Rather, the private right of action for a §
refused to lower his price unless the broker       2(c) Robinson-Patman Act claim, as for all
agreed to take a cut in his commission             private plaintiff antitrust rights of action, is
from 5% to 3%. The broker agreed and               provided by § 4 of the Clayton Act.
the sale was consummated at $1.25 with a           Genesco, Inc. v. T. Kakuichi & Co., 815
lower commission. The Court viewed this            F.2d 840, 853 (2d Cir. 1987). Section 4 of
transaction as identical to one in which the       the Clayton Act provides:
broker received a commission of 5%, the                    Any person who shall be
normal commission, and then turned over                    injured in his business or
a part of the commission, i.e., 2%, to the                 property by reason of
buyer. That would have been illegal under                  anything forbidden in the
§ 2(c) as a payment in lieu of brokerage                   antitrust laws may sue
and, therefore, the Court found that the                   therefor in any district court
reduction in commission in Broch was also                  of the United States in the
a payment in lieu of brokerage.                            district in which th e
  6                                                        defendant resides or is
   See, e.g., Harris v. Duty Free Shoppers
                                                           found or has an agent,
Ltd. Partnership, 940 F.2d 1272 (9th Cir.
                                                           without respect to the
1991); Stephen Jay Photography, Ltd. v.
                                                           amount in controversy, and
Olan Mills, 903 F.2d 988 (4th Cir. 1990);
                                                           shall recover threefold the
Larry R. George Sales Co. v. Cool Attic
                                                           damages by him sustained,
Corp., 587 F.2d 266 (5th Cir. 1979);
                                                           and the cost of suit,
Grace v. E.J. Kozin, 538 F.2d 170 (7th Cir.
1976); Calnetic Corp. v. Volkswagen of
America, Inc., 532 F.2d 674 (9th Cir.
1976); Rangen, Inc. v. Sterling Nelson &           v. Kentucky-Tennessee Light & Power Co.,
Sons, 351 F.2d 851 (9th Cir. 1965); Fitch          136 F.2d 12 (6th Cir. 1943).

                                               6
       including a reasonable                       purchased through that program. Hancock
       attorney’s fee.                              also argues that the increased cost put it at
                                                    a competitive disadvantage with regard to
                                                    hotels owned by Sheraton.
15 U.S.C. § 15(a). However, in order to
                                                            However, we do not think that
recover treble damages under § 4(a) of the
                                                    paying inflated purchasing prices to
Clayton Act, a private plaintiff must do
                                                    vendors, without more, is “an injury of the
more than simply show “an injury causally
                                                    type the antitrust laws were intended to
linked to” a violation of the antitrust laws.
                                                    prevent . . . that flows from that which
Brunswick Corp. v. Pueblo Bowl-O-M at,
                                                    makes the defendants’ acts unlawful.”
Inc., 429 U.S. 477, 489 (1977). A plaintiff
                                                    Brunswick, 429 U.S. at 489. Rather,
must also prove “antitrust injury, which is
                                                    Hancock’s injury was caused by a breach
to say injury of the type the antitrust laws
                                                    of contract and the corruption of the
were intended to prevent and that flows
                                                    principal-agent relationship. We agree
from that which makes defendants’ acts
                                                    that, in an appropriate case, a breach of
unlawful.” Id. Thus, the Court pronounced
                                                    contract or a breach of fiduciary duty
in J. Truett Payne Co. v. Chrysler Motors
                                                    could result in the kind of injury “the
Corp., 451 U.S. 557, 568 (1981), “even if
                                                    antitrust laws were intended to prevent.”
there has been a violation of the Robinson-
                                                    However, we do not believe that Hancock
Patman Act, [a plaintiff] is not excused
                                                    has established such an injury here. The
from its burden of proving antitrust injury
                                                    absence of such injury is fatal to
and damages.”
                                                    Hancock’s attempt to establish antitrust
         As noted above, the Supreme Court          standing.7
has not yet defined “antitrust injury,” for
purposes of a § 2(c) Robinson-Patman                  7
claim. However, Hancock argues that it                  As noted above, Sheraton manages the
suffered antitrust injury as a result of            Hotel under contract with Hancock.
Sheraton’s commercial bribery scheme,               However, Sheraton also manages hotels
i.e., the SPR program. Hancock refers to            that it actually owns. Hancock also alleges
this program as a “kickback” and claims             that the rebate scheme put it at a
that Sheraton inflated Hancock’s                    competitive disadvantage to Sheraton-
purchasing costs by adding SPR                      owned hotels because. According to
surcharges and then collecting the                  Hancock, “the rebate scheme impacted the
increased costs in the form of the rebates it       Hotel differently than it did Sheraton-
collected from Hancock’s vendors.                   owned hotels: The rebate program
According to Hancock, it suffered antitrust         increased the costs of the goods and
injury because it could only purchase               services [Hancock] purchased on behalf
goods from vendors participating in                 of the Hotel, whereas the rebate scheme
Sheraton’s SPR program, and it had to pay           did not impose a real cost on Sheraton-
these artificially inflated prices for goods        owned hotels, which simply ‘paid’ the
                                                    kickback to their corporate parent.”
                                                7
        “Antitrust standing and its                        It is now settled that a § 2(c)
terminological cousin, antitrust injury, are       plaintiff does not have to prove
often confused.” Triple M Roofing Corp.            competitive injury to establish a § 2(c)
v. Tremco, Inc., 753 F.2d 242, 247 (2d Cir.        violation. In Federal Trade Commission
1985). “Lack of standing and antitrust             v. Simplicity Pattern Co., 360 U.S. 55, 65
injury ofte n have been invoked                    (1959), the Supreme Court noted, inter
interchangeably against a plaintiff even           alia, that § 2(c) of the Robinson-Patman
though each concept involves a distinct            Act makes the business practices described
element of the § 4 action.” Greater                therein unlawful.         Therefore, “the
Rockford Energy and Technology Co. v.              proscriptions [of § 2(c)] are absolute. .
Shell Oil Co., 998 F.2d 391, 395 (7th Cir.         .[and § 2(c) does not] require[], as proof of
1993). Part of this confusion may result           a prima facie violation, a showing that the
from the ease with which antitrust injury          illicit practice has had an injurious or
and competitive injury can be conflated            destructive effect on competition.” Id.
into a single inquiry. 8                           Accordingly, “the presence of an anti-
                                                   competitive effect is not necessary to
                                                   prove a violation of section 2(c).”
                                                   Seaboard Supply Co. v. Congoleum Corp.,
Hancock’s Br. at 23.
                                                   770 F.2d 367, 371 n.3 (3d Cir. 1985). The
        However, Sheraton argues that
                                                   anti-competitive effect is the presumed
Hancock produced no evidence that
                                                   result of the illegal conduct.
Hancock was put at a competitive
disadvantage vis-a-vis Sheraton-owned                      However, the successful plaintiff
hotels because the evidence established            must still prove more than a § 2(c)
that there are no Sheraton-owned hotels in         violation and the accompanying anti-
the Washington, D.C. area where the Hotel          competitive effect to prevail. The plaintiff
does business. Sheraton’s Br. at 26.               must also establish the requisite antitrust
Absent any such competition, Sheraton              injury, and this requires more than
argues, Hancock could not have been put            establishing the anti-competitive effect
at a competitive disadvantage by the               that is endemic in the violation. In other
surcharge and therefore could not have             words, the mere fact that certain conduct
sustained a competitive injury because of
it.
                                                   our powers of reconciliation.”             A
   8
     The difficulty in distinguishing these        commentator subsequently noted that the
two interrelated concepts was summed up            “court could hardly have been faulted, for
by the district court in Wilson v. Ringsby         the confusion it noted has been endemic to
Truck Lines, Inc., 320 F.Supp. 699, 700            these cases since the creation of the treble-
(D. Colo. 1970). There the court candidly          damages action.” Daniel Richman, Note,
noted, “[w]e must confess at the outset            Antitrust Standing, Antitrust Injury, and
that we find antitrust standing cases more         the Per Se Standard, 93 Yale L. J. 1309
than a little confusing and certainly beyond       (1984).
                                               8
has an anticompetitive effect does not               their business to non-union contractors.9
mean that a given plaintiff has suffered an          Plaintiffs alleged that the coercion resulted
antitrust injury, or that a given plaintiff is       in less business for firms employing union
the appropriate party to seek recovery               carpenters. The Court held that because
under the antitrust laws. Accordingly,               the carpenters’ unions were “neither a
“[e]ven a plaintiff who can show antitrust           consumer nor a competitor in the market in
injury may lack antitrust standing. . . .”           which trade was constrained,” their
Barton & Pittinos, Inc., v. Smith Kline              injuries were not the type of injury that the
Beechum Corp., 118 F.3d 178, 182 (3rd                antitrust laws were designed to prevent.
Cir. 1997). The Supreme Court explained              Id. at 539. The carpenters’ unions may
this in Associated General Contractors of            well have had a cause of action under
California, Inc. v. California State Council         other statutes or common law, and a
of Carpenters, 459 U.S. 519 (1983).                  different plaintiff may have had a cause of
There, the Court said:                               action under the antitrust statues.
                                                     However, the carpenters’ unions had no
       [a] literal reading of [§ 4 of
                                                     standing to sue under those laws. The
       the Clayton Act] is broad
                                                     Court reached this conclusion even though
       enough to encompass every
                                                     the Association’s cond uct had an
       harm that can be attributed
                                                     anticompetitive effect. M oreover, firms
       directly or indirectly to the
                                                     hiring union carpenters had clearly
       consequences of an antitrust
                                                     suffered an anticompetitive injury because
       violation. Some of our prior
                                                     the Association’s coercion made it more
       cases have paraphrased the
                                                     difficult for those firms to win contracts.
       statute in an e quall y
                                                     Yet, notwithstanding the anticompetitive
       expansive way. But before
                                                     effect of the conduct in question, the Court
       we hold that the statute is as
                                                     concluded that the plaintiff carpenters’
       broad as its words suggest,
                                                     unions had not suffered a sufficient
       we must consider whether
                                                     antitrust injury.
       Congress intended such an
       open-ended meaning.                                  In arriving at that decision, the
                                                     Court read the antitrust statues in light of
                                                     their common law background and read a
Id. at 529-30 (footnote omitted).                    “proximate cause element into § 4
Associated General Contractors involved              [Clayton Act] actions.” Greater Rockford
a number of carpenters’ unions that                  Energy, 998 F.2d at 394. As a result of
a l l eg e d that A ssocia ted Ge nera l             Associated General Contractors, § 4 of the
Contractors, a trade association made up of          Clayton Act has been given a narrowed
general contractors, had coerced customers
and competing contractors to give some of              9
                                                         The Association’s customers included
                                                     landowners who needed construction
                                                     services.
                                                 9
reading. We have                                        . the antitrust laws were intended to
                                                        [remedy]”). City of Pittsburgh v. West
       synthesized the Court’s
                                                        Penn Power Comp., 147 F.3d 256, 264 (3d
       analysis into the following
                                                        Cir. 1998). “The antitrust standing inquiry
       formulation of the factors
                                                        is not a black-letter rule, but rather, [it] is
       that are relevant in an
                                                        essentially a balancing test comprised of
       antitrust standing challenge:
                                                        many constant and variable factors.” Id., at
       (1) the causal connection                        264-5 (internal quotation marks omitted).
       b e t w e e n the antitru st
       violation and the harm to the
                                                               Antitrust injury thus becomes but
       plaintiff and the intent by
                                                        one element of the inquiry into antitrust
       the defendant to cause that
                                                        standing. It is “a necessary but insufficient
       harm, with neither factor
                                                        condition of antitrust standing.” Barton &
       alone conferring standing;
                                                        Pittinos, 118 F.3d at 182 (citing Lower
       (2) whether the plaintiff’s
                                                        Lake Erie Iron Ore Antitrust Litig., 998
       alleged injury is of the type
                                                        F.2d at 1166). Therefore, as noted above,
       for which the antitrust laws
                                                        “[e]ven a plaintiff who can show antitrust
       were intended to provide
                                                        injury may lack antitrust standing, because
       redress; (3) the directness of
                                                        the remaining [Associated General
       the injury, which addressed
                                                        Contractors] factors may weigh against
       the concerns that liberal
                                                        allowing him or her to sue under the
       application of standing
                                                        antitrust laws.” 10 Id. (citing Cargill, Inc. v.
       principles might produce
                                                        Monfort of Colorado, Inc., 479 U.S. 104,
       speculative claims; (4) the
                                                        110 n.5 (1986)).
       existence of more direct
       victims of the alleged
       antitrust violations; and (5)                      10
                                                            The antitrust injury requirement of the
       the potential for duplicative                    antitrust standing inquiry is analogous to
       recovery or co mp lex                            the minimum standing requirement of a
       apportionment of damages.                        case or controversy within the meaning of
                                                        Article III, § 2 of the Constitution, while
                                                        the other Associated General Contractors
Barton & Pittinos, 118 F.3d at 181 (citing              factors are analogous to the prudential
In re Lower Lake Erie Iron Ore Antitrust                limitations on standing. Barton & Pittinos,
Litig., 998 F.2d 1144, 1165-66 (3d Cir.                 118 F.3d at 182 n.4; City of Pittsburgh,
1993)). The traditional concept of antitrust            147 F.3d at 264. [See Trump Hotels &
injury continues to be an important part of             Casino Resorts, Inc. v. Mirage Resorts
antitrust standing under this formulation. It           Incorp., 140 F.3d 478, 484-85 (3d Cir.
is subsumed within the second factor of                 1998), for a discussion of Article III
the 5 prong inquiry (i.e. “whether the                  standing and the prudential limitations on
plaintiff’s alleged injury is . . . the type . .        standing.]
                                                   10
        “The Associated General test has             (4)13 because there are clearly “more direct
been regularly and consistently applied as           victims” of Sheraton’s alleged commercial
the passageway through which antitrust               bribery scheme. Vendors who may have
plaintiffs must advance.” City of                    been prevented from selling goods to
Pittsburgh, 147 F.3d at 264. Accordingly,            Hancock because they refused to
even if we assume arguendo that Hancock              participate in the SPR program of
suffered an antitrust injury because it paid         surcharges and rebates are far more direct
inflated prices as a result of Sheraton’s            victims of Sheraton’s scheme than
alleged commercial bribery, that would not           Hancock. Moreover, their injury is much
necessarily establish Hancock’s antitrust            closer to the kind of injury antitrust laws
standing. Hancock must still navigate                address because the displaced vendors
through the course defined by Associated             were unable to participate in the market
General. Yet, it can not successfully do             c r e a te d b y th e S P R p r o g r a m .
that on this record because it can not               Significantly, Hancock comes close to
circumnavigate the barrier posed by                  conceding as much in its complaint.
Associated General factors (1), (3), (4) or          Hancock alleges:
(5). With regard to factors (1)11 and (3), 12
                                                            [v]endors unwilling to pay
we think it is important to remember that
                                                            kickbacks to Defendants
Sheraton contends that the surcharge and
                                                            were competitively harmed,
rebate aspects of the SPR program was not
                                                            and by m andating the
commercial bribery at all, but simply a
                                                            Hotel’s participation in
way for it to recoup the costs it incurred in
                                                            na tional a n d r e gional
administering the program.          Even if
                                                            contracts negotiated by
Sheraton inflated the amount of those
                                                            [ She r a ton], Defendants
charges beyond that which was necessary
                                                            de nie d [ Ha n cock] t he
to recoup its costs, the propriety of
                                                            o p p o rtunity to o b t a in
Hancock maintaining an antitrust action is
                                                            advantageous prices and
still problematic for reasons we will
                                                            terms        from    non-
elaborate upon below.
                                                            participating vendo rs.
       Even if we assume Hancock is                         Favored vendors not only
correct as to factors (1) and (3), it surely                drew sales or profits from
can not survive an inquiry under factor                     non-favored vendors, but
                                                            the attendant reduction in
                                                            competition and higher costs
                                                            resulted in direct antitrust
   11
      “The causal connection between the                    injury to [Hancock].
antitrust violation and the harm to the
plaintiff and the intent by the defendant to
cause that harm[.]”
                                                       13
                                                          “The existence of more direct victims
   12
        “The directness of the injury. . . .”        of the alleged antitrust violations[.]”
                                                11
Complaint at ¶ 143.                                  reversed because we concluded that the act
                                                     of state doctrine did not apply.16 In doing
       Although Hancock does allege that
                                                     so, we noted the difficulty of precisely
it suffered an anticompetitive injury by
                                                     defining standing under § 2(c). 847 F.2d
being forced to pay higher prices as a
                                                     at 1066. We also noted that “it is generally
result of reduced competition, we think
                                                     agreed that a direct competitor of a
Hancock is in an analogous situation to the
                                                     company that obtains a contract through
carpenters’ unions in Associated General
                                                     commercial bribery has standing to press a
Contractors. There, customers suffered a
                                                     2(c) claim against the briber.”            Id.
more direct and more appropriate antitrust
                                                     (citations omitted). Admittedly, we did not
injury even though the alleged antitrust
                                                     limit the class of potential § 2(c)
violation had an effect on the carpenters’
                                                     commercial bribery plaintiffs to disfavored
union. There is an analogous situation
                                                     competitors. However, we mentioned
here if we compare the injury of the
                                                     disfavored competitors having § 2(c)
excluded vendors to Hancock’s injury.
                                                     commercial bribery standing after stating:
       Unlike the Sherman Act, which                 “[I]n order to proceed with a claim, a
“protects competition, not competitors, . .          plaintiff must be able to demonstrate that
. the Robinson-Patman Act extends its                it is within the class of those injured in
protection to competitors.” Monahan’s                their business or property, who, based on a
Marine, Inc. v. Boston Whaler, Inc., 866             variety of factors, are best suited to further
F.2d 525, 528 (1st Cir. 1989) (emphasis in           the purposes of the statute by remedying
original). We think our discussion in                the violation alleged.” Id. at 1066 (citing
Environmental Tectonics is therefore also
quite helpful to this analysis. There, a
company bribed foreign officials in order
                                                     when a United States court appears to sit
to receive a contract to supply aircraft
                                                     in judgment on a foreign state’s regulation
equipment to the foreign government’s air
                                                     of its internal affairs. Under the doctrine,
force, and a competitor brought a § 2(c)
                                                     the courts of this country will refrain from
commercial bribery claim.14 The district
                                                     judging the validity of a foreign state’s
court dismissed the action in its entirety on
                                                     governmental acts in regard to matters
the basis of the act of state doctrine.15 We
                                                     within that country’s borders. The party
                                                     moving for the doctrine’s application has
                                                     the burden of proving that dismissal is an
    14
      The suit involved several claims in            appropriate response to the circumstances
addition to the § 2(c) commercial bribery            presented in the case.” Environmental
claim. However, the other claims are not             Tectonics, 847 F.2d at 1057-58 (citations
relevant to the issues here.                         omitted).
         15                                                  16
         “The doctrine is the judiciary’s                     As noted, we also held that
institutional response to the foreign                commercial bribery is actionable under §
relations tensions that can be generated             2(c). 847 F.2d at 1066.
                                                12
Alberta Gas Chemicals, Ltd. v. E. I.                        Accordingly, we hold that Hancock
DuPont De Nemours and Co., 826 F.2d                 does not have antitrust standing to pursue
1235, 1240 (3d Cir. 1987)). Significantly,          its § 2(c) Robinson-Patman Act claim. We
the portion of the Alberta Gas Chemicals            will therefore vacate the award of
opinion we cited discusses both Brunswick           $750,000 (subsequently trebled by the
and Associated General.                             district court) on that claim.
       Moreover, even if we focus on                B. BREACH OF THE AGENCY
Hancock’s allegation that it had to pay             P R O V I S I O N O F T H E
inflated prices because it was forced to            MANAGEMENT AGREEMENT
purchase only from “favored vendors,” and
ignore Hancock’s admission that
“[v]endors unwilling to pay kickbacks . . .                Sufficiency of the Evidence.
were competitively harmed[,]” we would
                                                            Sheraton claims that there is
still conclude that Hancock can not
                                                    insufficient evidence to sustain the award
establish antitrust standing under the fifth
                                                    of $10,260,000 for breach of the agency
factor in the Barton & Pittings analysis.
                                                    provision of the Management Agreement.
That requires us to consider whether an
                                                    Sheraton maintains that there is no
award of antitrust damages would be
                                                    evidence of harm for that breach that is not
duplicative, and Hancock’s antitrust
                                                    also captured in the itemization of possible
recovery is inextricably intertwined with
                                                    d a m ages se t f orth in the ju ry
its awards on the breach of contract and
                                                    interrogatories on the verdict form. On
breach of fiduciary duty claims.
                                                    that form, the jury awarded $10,260,000
        As noted above, Hancock asserted            for breach of the agency provision, and
a number of state law claims arising from           also separately awarded $250,000 for
the SPR program. The jury found that                purchasing services and $222,000 for
Hancock suffered $250,000 in damages                Workers’ Compensation. It awarded no
related to the purchasing services program          damages for the other categories listed on
and it also awarded $1,100,00 for                   the verdict form: the frequent traveler
Sheraton’s breach of fiduciary duty. The            program, the reservations system, “usable
actions supporting those awards constitute          denials” practices, complimentary rooms
breach of contract and breach of fiduciary          practices, or for any other contractual duty.
duty. Allowing a separate recovery under            The relevant interrogatory asks jurors:
§ 2(c) creates insurmountable problems in           “[w]hat damages, if any, do you award to
apportioning damages along with the real            plaintiffs for a breach of the Management
possibility of cumulative damages.17                Contract concerning each of the following.
                                                    . . .”
                                                           Hancock responds by arguing that
        17
         Indeed, given the nature of
Hancock’s claimed damages, duplicative
recovery is not only possible, it is                exceedingly probable if not inevitable.
                                               13
the evidence of the breach of the agency                             First, the jury made no finding of
provision extended beyond the rebate                          wilful breach of contract and it was never
payments, and suggests several possible                       instructed on applying principles of
bases for the $10,260,000 award. We are                       disgorgement. Second, the jury verdict
not persuaded. For example, Hancock                           includes a specific finding for breach of
relies upon the Workers’ Compensation                         fiduciary duty and the jury listed an
program. However, as noted, the jury                          amount of $1,100,000 as damages for that
separately awarded $222,000 for that                          breach. Accordingly, we find no support
program. Hancock cites the level of                           for the award of $10,260,000, and will
usable denial practices and the frequent                      therefore vacate that award.
travelers program, which were itemized on
                                                              C. PUNITIVE DAMAGES
the verdict form. However, the jury
awarded no damages for them. Hancock                                 Sheraton challenges the punitive
also cites an unexplained and unquantified                    damage award on several grounds. It
item that it refers to as a bogus relocation                  argues that the award was not supported by
expense. However, no such item was                            clear and convincing evidence, that the
listed on the verdict form.                  Lastly,          relevant jury instructions were erroneous,
Hancock argues that Sheraton swept                            and that the award was excessive.
certain of its bank accounts and claims that
                                                                     Sheraton argues on appeal that the
also supported an award of damages.
                                                              District of Columbia standard of proof on
However, the sweeping of accounts
                                                              Hancock’s punitive damages claim applies
occurred after termination of the agency
                                                              and that, under that standard, punitive
provision.            Thus, none of those
                                                              damages can be awarded “only if it is
e x p l a n a ti o n s s u p p o rt s a w a r d i n g
                                                              shown by clear and convincing evidence
$10,260,000 for breach of the agency
                                                              that the tort committed by the defendant
provision.           A lte rn ati ve ly, H a n c o c k
                                                              was aggravated by egregious conduct and
contends that the jury could have awarded
                                                              a state of mind that justifies punitive
damages on the theory that a fiduciary
                                                              damages.” Johanthan Woodner Co. v.
breach entitled Hancock to disgorgement
                                                              Breeden, 665 A.2d 929, 938 (D.C. 1995).
of the fees it paid to Sheraton over the life
                                                               Hancock argues otherwise and claims that
of the Management Agreement. Hancock
                                                              Delaware law governs the standard of
claims that the award of $10,260,000
                                                              proof and, under that standard, the
represents 15% of the $68,400,000
                                                              preponderance of evidence standard
Hancock paid. Citing the Restatement
                                                              applies to punitive damages. See Cloroben
(Second) of Agency, § 469, Hancock
                                                              Chem. Corp. v. Comegys, 464 A.2d 887,
suggests that Sheraton lost its right to
                                                              891 (Del. 1983).
compensation because it wilfully breached
its contractual obligations and that                                  The district court instructed the jury
disgorgement is an appropriate remedy for                     that it must find the elements of punitive
fiduciary breach. We disagree.                                damages by a preponderance of the
                                                              evidence. Sheraton did not object to that
                                                         14
instruction. We have held that this type of           determined that punitive damages should
error is fundamental error entitling a                be one and one-half times the relevant
defendant to a new trial; it is not subject to        compensatory damages. We adopt that
waiver. Beardshall v. Minuteman Press                 ratio for the purpose of calculating the
Int’l, Inc., 664 F.2d 23 (3d Cir. 1981).              judgment on remand for several reasons.
However, Sheraton submitted proposed
                                                              We review a grant of remittitur for
jury instructions that did not include an
                                                      abuse of discretion. Gumbs v. Pueblo
instruction that entitlement to punitive
                                                      Int’l, 823 F.2d 768, 771 (3d Cir. 1987).
damages must be established by clear and
                                                      We also afford the district court’s
convincing evidence. Therefore, assuming
                                                      assessment of punitive damages a degree
that the instruction was wrong, it was
                                                      of deference since that court is familiar
tantamount to invited error. U.S. v. West
                                                      with the evidence. See Keenan v. City of
Indies Transport, Inc., 127 F.3d 299, 306
                                                      Philadelphia, 983 F.2d 456, 472 (3d Cir.
(3d Cir. 1997) (holding that error in
                                                      1992) . Moreover, although Hancock has
challenged jury instruction was invited,
                                                      cross-appealed from the grant of the
and thus did not provide basis for reversal,
                                                      remittitur, neither party has taken issue
when defendants failed to request
                                                      with the district court’s ratio.1 9
instruction that they asserted on appeal and
                                                      Accordingly we will reduce the punitive
their proposed instruction was remarkably
                                                      damage award to $2,025,000.
similar to that actually given).
                                                      IV. CONCLUSION
       In ruling on Sheraton’s post-trial
motion, the district court determined the                    For the reasons stated above, we
amount of the punitive damages to be                  will vacate the award of $750,000 for
$11,610,000. That included the award of               violation of the Robinson-Patman Act, as
$10,260,000 for breach of the agency                  subsequently trebled by the trial court to
agreement. Since we are vacating the                  $2,250,000; as well as the award of
award for breach of the agency agreement,             $250,000 for purchasing services, and the
we must concomitantly reduce the punitive             $10,260,000 award for breach of the
damage award so that it only reflects the             agency agreement. We will affirm the
surviving damages – $250,000 for                      awards of $222,000 for W orkers’
purchasing activities, and $1,100,000 for             Compensation; and $1,100,000 for breach
common law damages, or $1,350,000.18 In               of fiduciary duty, breach of the implied
granting the remittitur, the district court
                                                         19
                                                           See State Farm Mut. Automobile Ins.
   18
     The district court noted that plaintiffs         Co. v. Campbell, U.S.Sup.Ct. No. 01-1289
did not specify an amount for breach of               (April 7, 2003) (stating that “in practice,
W orkers’ C ompensation in their                      few awards exceeding a single-digit ratio
computation of relevant compensatory                  between punitive and compensatory
damages, and it therefore did not include             damages, to a significant degree, will
that amount in its calculation.                       satisfy due process.”).
                                                 15
duty of good faith and fair dealing, and
intentional or negligent misrepresentation.
We will reduce punitive damages to
$2,025,000, for reasons already stated. We
remand to the district court with direction
to enter judgment consistent with this
opinion and for further appropriate
proceedings.20




    20
      We have considered the remaining
contentions of the parties and conclude
that we can affirm the district court’s
rulings on those issues without further
discussion.
                                              16
