Monsanto Co. v. Spray-Rite Service Corp.

465 U.S. 752 (1984)

Purchase the Printed Copy at bsmsphd.com

Nature of the Case

To access this section all you need to do is click here and register.

Facts

D manufactures chemical products, including agricultural herbicides. P was a family business, whose owner and president, Donald Yapp, was also its sole salaried salesman. P was a discount operation, buying in large quantities and selling at a low margin. P was an authorized distributor of D herbicides from 1957 to 1968. In October 1967, D announced that it would appoint distributors for 1-year terms and that it would renew distributorships according to several new criteria. Among the criteria were: (i) whether the distributor's primary activity was soliciting sales to retail dealers; (ii) whether the distributor employed trained salesmen capable of educating its customers on the technical aspects of D's herbicides; and (iii) whether the distributor could be expected 'to exploit fully' the market in its geographical area of primary responsibility. In October 1968, D declined to renew P's distributorship. P was the 10th largest out of approximately 100 distributors of D's primary corn herbicide. In 1968, D did not renew P after complaints from other distributors about P’s discount pricing. This crippled P who eventually ceased operations in 1972. P sued D alleging that D and some of its distributors conspired to fix the resale prices of D herbicides. P also alleged that D encouraged distributors to boycott P in furtherance of this conspiracy. D asserted that P's distributorship had been terminated because of its failure to hire trained salesmen and promote sales to dealers adequately. The jury found that (i) the termination of P was pursuant to a conspiracy between D and one or more of its distributors to set resale prices, (ii) the compensation programs, areas of primary responsibility, and/or shipping policies were created by D pursuant to such a conspiracy, and (iii) D conspired with one or more distributors to limit P's access to D herbicides after 1968. The jury awarded $3.5 million in damages, which was trebled to $10.5 million. The Court of Appeals affirmed. The court stated that 'proof of termination following competitor complaints is sufficient to support an inference of concerted action.' The Supreme Court granted certiorari.