Monsanto Co. v. Spray-Rite Service Corp.

465 U.S. 752 (1984)


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.