Coalition for Equitable Minority Participation in Architectural Contracts in Tennessee v. Nashville Metropolitan Government Brief for the Appellants

    No. 84—6026

IN THE UNITED STATES COURT OF APPEALS 
FOR THE SIXTH CIRCUIT

COALITION FOR EQUITABLE MINORITY PARTICIPATION IN ARCHITECTURAL CONTRACTS 
IN TENNESSEE, et al.,

— ̂ -I f-f p - Arvr»o 1 1 3 TVt" CJ
V.

METROPOLITAN GOVERNMENT OF NASHVILLE AND 
DAVIDSON COUNTY, et al.,

Defendants-Appellees.

APPEAL FROM THE UNITED STATES DISTRICT COURT 
FOR THE MIDDLE DISTRICT OF TENNESSEE wic;mrTT,T,E DIVISION

BRIEF FOR THE APPELLANTS

ELEANOR M. FOX40 Washington Square, 
SouthNew York, New York 10012 
Tel: (212) 598-2016

Of Counsel

WILLIAMS AND DINKINS 
AVON N. WILLIAMS 
RUSSELL T. PERKINS 
RICHARD H. DINKINS203 Second Avenue, North Nashville, Tennessee 37201 

Tel: (615) 244-3988
JULIUS LEVONNE CHAMBERS 
NAPOLEON B. WILLIAMS, JR.

99 Hudson StreetNew York, New York 10013
Tel: (212) 219-1900

Attorneys for Appellants



TABLE OF CONTENTS

TABLE OF AUTHORITIES .................................  ii
ISSUES PRESENTED .....................................  1
STATEMENT OF THE CASE .............   3
STATEMENT OF THE FACTS ...............................  5
SUMMARY OF ARGUMENT ..................................  21
ARGUMENT

I. APPELLEES' ANTITRUST DEFENSE IS NOT 
A DEFENSE TO APPELLANTS' CIVIL RIGHTS
CLAIMS ......................................  25

II. CIVIL RIGHTS STATUTES PREEMPT INCONSISTENT
ANTITRUST LAWS AND REQUIRE THE ANTITRUST LAWS
TO BE INTERPRETED AND APPLIED TO CARRY OUT THE
SPIRIT AND THE PURPOSES OF THE CIVIL RIGHTS LAWS 32

III. THE COURT SHOULD STRIKE THE ANTITRUST DEFENSE 
ON THE GROUND THAT COMPACT IS A PROCOMPETITIVE 
JOINT VENTURE AND THAT THE DEFENSE IS WITHOUT 
MERIT ......................................  36

IV. THE DISTRICT COURT SHOULD HAVE APPLIED A 
NARROW RULE OF REASON IN VIEW OF CIVIL
RIGHTS LAWS AND POLICIES ....................  46

CONCLUSION .........................................  48

Page

l



Page
TABLE OF AUTHORITIES

CASES
A.B. Small Co. v. Lamborn & Co., 267 U.S. 248 (1925) .....  28
Appalachian Coals v. United States, 288 U.S. 344

(1933) ..............................................  41
Berkey Photo, Inc. v. Eastman Kodak Co., 603 F.2d263 (2d Cir. 1979), cert, denied, 444 U.S. 1093

(1980) ..............................................  46
Broadcast Music, Inc. v. CBS, Inc., 441 U.S.

1 (1979) .......................................  39,40,41
Bruce's Juices, Inc. v. American Can Co., 330 U.S.

743 (1947) ........................................  28
Brunswick Corp. v. FTC, 456 U.S. 915 ( 1982) .............  39
Brunswick Corp. v. Pueblo Bowl-O—Mat, Inc., 429 U.S.

477 ( 1977) .........................................  33
Brunswick Corp. v. Riegel Textile Corp. 1985-1 Trade Cas.

U 66,333 (7th Cir. 1984)   24
California Computer Products, Inc. v. IBM, 613 F.2d

727 (9th Cir. 1979) .................................  46
Chrysler Corp. v. General Motors Corp., 1985-1 Trade

Cas. 1 66,391 (D.D.C. 1985) .........................  29
Connoly v. Union Sewer Pipe Co., 184 U.S. 540 (1902) .... 27,28
Continental T.V., Inc. v. GTE Sylvania, Inc., 433

U.S. 36 ( 1977) .....................................  40'41
Continental Wall Paper Co. v. Louis Voight & Sons Co.,

212 U.S. 227 ( 1909)..............................  26,27,29
D. R. Wilder Mfg. Co. v. Corn Products Ref. Co., 236

U.S. 165 (1915) .................................  26,28
Eastern Railroad Presidents Conference v. Noerr Motor

Freight, Inc., 365 U.S. 127 ( 1961 )   21
Gordon v. New York Stock Exchange, 422 U.S. 659

( 1975) .............................................  33
Hommel Co. v. Ferro Corp., 659 F.2d 340 (3rd Cir.

1981)   46

- ii -



/

Hospital Building Company v. Trustees of Rex Hospital,
1982-83 Trade Cas. 1| 64,992 (4th Cir. 1982), cert, 
denied, 104 S.Ct. 231 (1984)........................  47

Page

Jerrold Electronics Corp. v. United States, 187 F. Supp. 545 
(E.D. Pa. 1960), aff'd 365 U.S. 567 91961) ..............
Kalmanovitz v. G. Heileman Brewing Co., 1981-1 Trade Cas.

II 66, 389 (D. Del. 1984) ...........................
Kelly v. Kosuga, 358 U.S. 516 (1959) ....................  2
National Collegiate Athletic Ass'n v. Board of of University of Oklahoma, 104 S.Ct. 2948 

(1984) .................................
Regents
.... 38,40,41,42

Pan American World Airways v. United States, 371 
U.S. 296 (1963) ..........................

Perma Life Mufflers v. International Parts Corp., 
392 U.S. 134 (1968) .......................

Transamerica Computer Co. v. IBM, 698 F.2d 1377(9th Cir. 1983), cert, denied, 104, S.Ct. 370 
(1983) .........................................

Triple M Roofing Corp. v. Tramco, Inc., 1985-1 Trade
Cas. 1966, 382 (2nd Cir. 1985) .................United States v. Addyston Pipe & Steel Co., 85 F. 271 
(6th Cir. 1898), aff'd, 175 U.S. 211 (1899) ....

United States v. Arnold, Schwinn & Co., 388 U.S. 365
(1967) .........................................

United States v. Columbia Pictures Corp., 189 F. Supp. 
153 (S.D.N.Y. 1960) ............................

United States v. Grinnell Corp., 384 U.S. 563 (1966) .
United States v. LTV Corp., 1984-2 Trade Cas. 11 66,133 

(D.D.C. 1984) ..................................
United States Motor Vehicle Mfg. Ass'n, 1982-83 Trade 

Cas. 11 65,175 ( 1982) ............................
United States v. National Association of Security

Dealers, 422 U.S. 694 (1975) ...................

46

45
39

40

41 
44

24

23

33

i n



United States v. Pennington, 381 U.S. 657 (1965) .........  21
United States v. United Shoe Machinery Corp., 110 F.Supp.

295, 347 (D. Mass. 1953), aff'd per curiam, 347
U.S. 521 ( 1954)   37

United States v. Waste Management, Inc., 743 F.2d 976
(2d Cir. 1984) .................................  24

Yamaha Motor Co. v. FTC, 657 F.2d 979 (8th Cir. 1981), cert, denied sub nom. Brunswick Corp. v. FTC.,
456 U.S. 915 ( 1982) ............................  39,42

ADMINISTRATIVE CASES
Brunswich Corp., [1979-1983 CCH Transfer Binder]H 21,623 at 21,786 (FTC 1979), aff'd in relevant

part sub nom....................................  3^
General Motors Corp./Toyota Corp., 48 Fed. Reg. 57246,

57314 ( 1983), 49 Fed. Reg. 18289 ( 1984) ........  23
In re E. I. duPont de NeMours & Co., 3 Trade Reg. Rep.

1121 ,770 (FTC 1980)..............................  46
Standard Oil Co. of Californiqa, 3 CCHTrade Cas. II 22,144 (FTC 1984)   24

UNITES STATES CONSTITTUION
First Amendment .....................................  3
Thirteenth Amendment ................................  3,13
Fourteenth Amendment ................................  3,13

STATUTES
15 U.S.C. 11 1   2,23,30,20,22,25
15 U.S.C. 11 637(d) ................................ 17,21,29
42 U.S.C. 11 1981
42 U.S.C. 11 1982

Page

42 U . S . C .  II 1983

IV

3 . 1 3 . 2 1 . 2 9 . 3 3

3 . 1 3 . 2 1 . 2 9 . 3 3

3 . 1 3 . 2 1 . 2 9 . 3 3



Page

42 U.S.C. 11 1985 
42 U.S.C. 11 1986 
42 U.S.C.H 1988 . 
42 U.S.C. 11 2000d

3.13.21.29.33 
3,13,21 ,29,33
3.13.21.29.33
3.13.21.29.33

LEGISATIVE HISTORY
Address by President Wilson on Trusts andMonopolies before Joint Session of Congress 

(Jan. 20, 1914) H.R. Doc. No. 625 63rd 
Cong., 2d Sess. 5 (1914) .................

Remarks of Senator Kefauver, 96 Cong. Rec.
16452 (1950) ............................

Remarks of Representative Celler, 95 Cong. Rec 
11486 (1949) ...........................

Sherman Act, 21 Cong. Rec. 2460 (1890) ......

22

22

22
22

JUSTICE DEPARTMENT GUIDES
Department of Justice Guide on Antitrust andInternational Operations CCH Trade REg. Rep, 

No. 266 (Feb. 1 , 1977) ................... .
1984 Department of JusticeMerger Guidelines, 2 CCH 

Trade Reg. Rep. 11 4225 ...................... .
1985 Department of Justice Vertical Guidelines, 48 BNA Antitrust & 

No. 1199 (Special Supplement,
Restraints 
Trade Reg . Rep. 
Jan. 24, 1985) .

39

44

44

BOOKS
Areeda, Antitrust Analysis (3rd ed. 1981) ....
Posner, Antitrust Law: An Economic Perspective

(1976) .................................

IV



Page
ARTICLES ' ^

Brodley, "Joint Ventures and Antitrust Policy, 95
Harv. L. Rev. 1523 ( 1982) ......................  40

Easterbrook, "The Limits of Antitrust", 63
Texas L. Rev. 1 91984) .........................  24

First, "Competition in the Legal Education Industry,"
53 N.Y.U.L. Rev. 31 1 ( 1978) .....................  36
54 N.Y.U.L. L. Rev. 1049 (1979) .................  36

Panel Discussion-Interview with William F. Baxter,
50 A.B.A. Antitrust L. J. 151 (1981) ...........  23

Interview with William F. Baxter, 51 A.B.A. Antitrust
L. J. 23 ( 1982) ................................  23

- vi -

i



IN THE UNITED STATES COURT OF APPEALS 
FOR THE SIXTH CIRCUIT

No. 84-6026

COALITION FOR EQUITABLE MINORITY 
PARTICIPATION IN ARCHITECTURAL 
CONTRACTS IN TENNESSEE, et al.,

Plaintiffs-Appellants,
v.

METROPOLITAN GOVERNMENT OF NASHVILLE AND 
DAVIDSON COUNTY, et al.,

Defendants-Appellees

APPEAL FROM THE UNITED STATES DISTRICT COURT 
FOR THE MIDDLE DISTRICT OF TENNESSEE 

NASHVILLE DIVISION

BRIEF FOR THE APPELLANTS

ISSUES PRESENTED

1. Whether an agreement among members of appellant 
Coalition for Equitable Minority Participation in Architec­
tural Contracts in Tennessee hereinafter referred to as 
COMPACT not to pursue or accept as an individual firm, 
without agreement of all members, any project targeted or 
pursued by COMPACT as a potential contract for COMPACT is 
an anti—trust violation which operates as a defense to



bar suits alleging racial discrimination in awarding contracts 
for architectural services?

2. Whether agreement by members of COMPACT not to 
pursue or accept, as individual firms, projects targeted or 
pursued by COMPACT as contracts for COMPACT, is a £er se 
violation of Section 1 of the Sherman Act, 15 U.S.C. (1976)?

3. Whether the formation of COMPACT for the purpose of 
enabling minority architectural firms to obtain public work 
contracts previously denied to them on the basis of race and 
inadequate size is a relevant factor for determining the 
scope and application of Section 1 of the Sherman Act, and 
determining whether the rule of reason ought to be applied 
in determining the validity of appellants' acts under the
Sherman Act?

4. Whether the district judge below erred in determin­
ing as a matter of law, or as a fact, that minority business 
enterprise set-aside shares on public contracts represent a 
discrete submarket for architectural services for the 
purpose of determining whether appellants' conduct violated 
Section 1 of the Sherman Act?

5. Whether the district judge erred in granting summary 
judgment against appellants when issues of fact were m  

dispute?

6. Did the district judge err in not granting appellant 
request below for a preliminary injunction?



STATEMENT OF THE CASE

Plaintiffs-appellants, a joint venture of three 
architectural firms and the members thereof, commenced 
this action on August 14, 1984 against the Metropolitan 
Government of Nashville and Davidson County, Tennessee, 
the Metropolitan Nashville Airport Authority, the 
Metropolitan Board of Education, the officers of sard 
governmental agencies, and several architectural and 
engineering firms, alleging that defendants had maintained 
and were pursuing, policies, practices, customs, and usage 
of discrimination against plaintiffs as black architects 
and architectural firms in Davidson County, Tennessee on 
account of their race and color.

The complaint charged that defendants violated 
plaintiffs' rights under the First, Thirteenth, and Fourteenth
Amendments to the Constitution of the United States, and under

42 U S C §§1981, 1982, 1983, 1985, 1986, 15 U.S.C. §1 et seq; 42 U.b.c. ss
1988, 2000d. Plaintiffs requested preliminary and final 
injunctions enjoining defendants from discriminating against 
them on the basis of race or color, and enjoining defendants 
to engage COMPACT for architectural services in conjunction 
with the design and construction of a new airport facility 
in Nashville, Tennessee. The complaint also requested 
that plaintiffs be awarded compensatory and punitive damages

The district court, on August 14, 1984 granted a

3



temporary restraining order. A hearing on the temporary 
restraining order was held on August 17, 1984 and extended 
to August 27, 1984 in conjunction with a hearing on plaintiffs’ 
motion for a preliminary injunction. On August 27, 1984 
the district court dissolved the temporary restraining 
order and denied the motion for a preliminary injunction.

Pursuant to a suggestion by the district judge, 
appellees, the defendants below, filed on August 27, 1984 
a motion for summary judgment. Thereafter, defendants filed 
answers to the complaint and the district court, on September 
11, 1984 entered an order expediting consideration of the 
motion for summary judgment.

On October 18, 1984, the district court filed an 
order and accompanying memorandum opinion granting partial 
summary judgment against plaintiffs with respect to the claims 
involving the construction project at the Metropolitan 
Airport and dismissing said claims.

On November 21, 1984, the district court entered an 
order, nunc pro tunc October 18, 1984, certifying, pursuant 
to Rule 54(b), Fed. R. Civ. P. and 28 U.S.C. §1292(a)(2) 
that there is no just reason for delay of an appeal from 
the partial summary judgment.

Plaintiffs posted on November 16, 1984, a cost bond 
and filed a notice of appeal to this Court.

4 «



STATEMENT OF THE FACTS

The plaintiffs-appellants in this action are COMPACT, 
three minority architectural firms,^McKissack & McKissack 
& Thompson architects & Engineers, Harris Associates
a/k/a Harris S< Harris, Architects, and L. Quincy Jackson,

3/Architect, and individual members of the three minority 
architectural firms. COMPACT is a joint venture of the 
three firms. The three firms are the only black-owned licensed 
architectural firms in middle Tennessee. Jt. Appendix II at 122-23

Prior to 1954, minority architectural firms in middle 
Tennessee received awards from municipal, or county, govern­
mental agencies, for work on segregated black public projects 
such as black schools or black housing projects. Jt. Appendix II, 
63, testimony of L. McKissack). No work was provided to
black architects on public projects used for the benefit of

4/
white inhabitants. (Id.).

1/ McKissack & McKissack & Thompson Architects & Engineers
Is the result of a merger in 1984 of two black architectural 
firms, McKissack & McKissack and Thompson-Miller, which 
previously had been doing business separately for 79 and 12 
years respectively. Jt. Appendix I, at 13.
2/ Harris Associates has been in practice for 15 years
In its home office in Nashville, Tennessee. Id. at 14.
3/ l . Quincy Jackson Architect is a single architectural
practitioner, with associates, that has been in practice m  
Nashville, Tennessee for over 30 years. Id.
4/ Paragraph 4(b) of the complaint alleges that, when racial
segregation was required by law, the City of Nashville and Davidson County, Tennessee limited "black architects to perform 
ing services upon projects intended for the use of black 
citizens." Id. at 16.

5



Thereafter, it was the policy of the City of Nashville 
and the County of Davidson, Tennessee either to exclude black 
architectural firms from work on public projects or to enlist 
their services as subcontractors^chosen by a white architec­
tural firm acting as principal. Id. (See, paragraphs 4,5, 
and 7 of complaint). Present practices of the governmental 
defendants continue to show a double standard towards black 
and white architectural firms and have the purpose and effect
of discriminating against black architectural firms, including6/
these plaintiffs, on racial grounds.

c/ The complaint alleges that the governmental defendants
have never awarded architectural fees to black architectectural 
firms in excess of $57,000."since racial segregation in public 
facilities first was declared unconstitutional m  1954.
(paragraph 7b of complaint). Id. at 19.
6/ For example, in paragraph 7 of the complaint, the
nlaintiffs allege that in the fall of 1983, the defendant Metropolitan Board of Education of Davidson County, Tennessee 
awarded two multi-million dollars contract involving construction 
of two new comprehensive high schools, one predominantly white 
and the other predominantly black. Id. at 18.

Awards to the contract went to two white ^S^SSalified firms even though plaintiffs were equally, or better, qualified 
to perform the work. Moreover, the complaint alleges that the 
defendant school board specifically advised one of the white 
firms that it was not necessary to have a joint venture with anv minority architectural firm, thus causing that^firm to 
withdraw its offer to one of the plaintiffs for a joint venture. SS^graph 7c of the complaint alleges that the reasons given by 
the board of education for not awarding any portion of the contract to plaintiffs were pretexts for racial discrimination.

Similarly, in 1981, the complaint alleges that defendant 
Metropolitan Naihville Airport Authority refused to_award any 
portion of contract for the construction of a ■ terminal
facility at the Nashville Airport to any of the plaintiffs. 
AlthouhYplaintiffs were the only black architectural firms in
middle Tennessee and some of the PlaintJ ^ s Tennesseeexperience working on airports outside the State of Tennessee,

6



To combat the racial discrimination which they had 
experienced, plaintiffs-appellants McKissack & McKissack & 
Thompson, Harris Associates, and L. Quincy Jackson entered 
into an agreement, on May 31, 1984 establishing as a joint 
venture an unincorporated association designated as the 
Coalition for Equitable Minority Participation in Architec­
tural Contracts in Tennessee (COMPACT). The three black 
architectural firm-members of COMPACT are the only minority 
firms with a home base in middle Tennessee. Together, the 
three firms, along with COMPACT, have approximately ten (10) 
licensed architects. (Jt.Appendix H, at 66, 123, August 17, 
1984).

The May 31, 1984 agreement establishing COMPACT states 
that the three black firms composing COMPACT "have not 
received their fair share of the professional contracts 
awarded to architects by public and private agencies" and 
that it is necessary for the three firms to come together in 
creating COMPACT for the purpose of "immediately alleviating

jj/ (Continued)
the defendant Authority nevertheless awarded the work for 
the project to a joint venture of two predominantly white
architectural firms. (Paragraph 7d c^ 1“ t) *d C°St for the project ultimately exceeded $50,000,000. Id.
7/ Williams-Russell & Johnson, the minority architectural
firm chosen by defendant-appellee Gresham & Smith to work 
with it on the Nashville Airport, has its home base in Atlanta, 
Georgia. (Jt. Appendix .II, at 42, 123, August 17, 1984).

7



and ultimately eliminating said racial discrimination and 
opening the entire range of architectural awards, both 
public and private, to said black architects and architec­
tural firms."

Paragraph 3 of the May 31, 1984 agreement gives each 
member firm an equal voice in the affairs of COMPACT and an 
equal share of the profits of the joint venture. Paragraph 
5 of the agreement, the provision which the court below held 
violated Section a of the Sherman Act, 15 U.S.C. §1, states 
the following:

5. COMPACT shall delineate specifically 
and in writing the areas of marketing for architectural contracts which it 
wishes to pursue on a joint venture basis 
for the benefit of its members and shall 
also designate specifically the areas 
which members are free to pursue in their 
own private marketing activities apart 
from COMPACT. No member shall pursue 
or accept as an individual firm without 
agreement of all members of COMPACT in writing in advance, any project which COMPACT has targeted or is pursuing in £/any way as a potential project for COMPACT.

The effect of the last sentence of Section 5 above is to 
prohibit members of COMPACT who participate in its prepara­
tions for targeting or pursuing bids on architectural 
contracts, from taking thereafter individual, or separate,

8/ Similarly, Article V, Section (a) of COMPACT'S by­
laws provide that "No member shall pursue or accept as 
an individual firm without agreement of all members of COMPACT in writing in advance, any project which COMPACT 
has targeted or is pursuing in any way as a potential 
contract for COMPACT." Jt. Appendix I, at 8b.

8



action on their own behalf for the same contract.

COMPACT was established in order to pool the resources
of the three small minority architectural firms to provide
"various professional abilities and to have a greater number
of people available to do work" on projects bigger than any

10/of the three could do alone. (Jt. Appendix II, L. Quincy 
Jackson at 130-131.

Since its formation, COMPACT has targeted two projects, 
the Nashville airport terminal project, which is the subject 
of the present interlocutory appeal, and a downtown Nashville 
convention center (L. Quincy Jackson, Jt.Appendix II, 87, August 17, 
1984). The May 31, 1984 agreement establishing COMPACT

9/

9/ Neither Section 5 of the May 31, 1984 agreement nor
Article V, Section (a) of the by-laws contains any provision 
regulating members' conduct, or that of COMPACT, in situations 
where a member firm pursues or targets a project first. The 
affidavits, depositions, and testimony on the motion for summary judgment and for a preliminary injunction did not 
cover this possibility.
10/ During the hearing on plaintiffs' request for a 
preliminary injunction, plaintiff L. Quincy Jackson testified 
that his "purpose for joining COMPACT was to be able to work 
with minority architects on large projects . . . that were 
beyond the capabilities of small architects to work on and 
. . . because (each) of the three firms have had in the past 
and in the present, difficulty in acquiring larger jobs and 
particularly those jobs that are funded by local, state and 
federal governments." ( Jt. App. 11,85-86) . Jackson also 
testified that Clarke Sharpe, "civil rights commissioner of 
the FAA had stated at a meeting that the Metropolitan Nashville 
Airport Authority "had at that time not involved minority participation from 1981 through 1984." Jt. Appendix II at 91, 
August 17, 1984.

9



that the formation of COMPACTstates, in the opening page, 
is designed to eliminate racial discrimination in the "entire 
range of architectural awards, both public and private."

This case arises out of a denial of job opportunities for 
COMPACT to provide architectural services in connection with the 
design and construction of a planned expansion of the Nashville 
Airport. The airport is operated by the Metropolitan Nashville 
Airport Authority (MNAA). Prior to the formation of COMPACT 
on May 31, 1984, the MNAA had awarded in 1980 a contract to 
perform the schematic design phase of the construction of a 
new terminal complex at the Nashville airport to a joint 
venture consisting of an out-of-state architectural firm 
Reynolds, Smith and Hills, and a local firm. The local firm 
chosen was defendant Gresham, Smith and Partners, then doing 
business under the name of Gresham and Smith. In early 
1982, the work on the schematic design phase was completed.
(See, Memorandum of Metropolitan Nashville Airport Authority 
In Opposition to Plaintiffs' Motion for a Temporary Restrain­
ing Order and/or Preliminary Injunction, p. 3-4).

In the fall of 1983, plaintiff L. Quincy Jackson 
attended a conference concerning the construction phase of 
the planned expansion of the Nashville airport and attempted 
to secure information to enable his firm to obtain work on 
the airport project (Jt. Appendix II 87-88). On May 18, 1984, 
the Board of Commissioners of the MNAA decided to proceed 
with the construction phase of the new airport terminal

10



Project and simultaneously decided to retain only one of 
the two joint venture firms. On or after June 22, 1984, 
the Board selected the local firm of Gresham, Smith and 
Partners on the ground, in part, that a local firm was 
needed to establish local accountability. (MNAA's 
Memorandum in Opposition to Plaintiffs' Motion for a 
Temporary Restraining Order and/or Preliminary Injunction, 
pp. 4-5). The proposal of Gresham, Smith and Partner 
provided that other professional firms would work with it 
as a team. No provision for minority participation, however, 
was included in the proposal. Id.

During this period, COMPACT was formed and its 
representatives sought participation for COMPACT in the 
contract award to Gresham, Smith and Partners as a part of the 
team. The MNAA had a stated policy favoring minority partic­
ipation. Id. (Also Jt. Appendix II at 27-43,87-99). COMPACT had 
previously sought participation in the airport work prior to 
the MNAA's decision in June, 1984 to select Gresham, Smith 
and Partners but had not been allowed to bid on the project 
as a local architectural firm despite a request to do so.

After June 1984, Gresham and Smith proceeded to obtain 
design implementation subcontracts. Their general practice 
had been to parcel out jobs to black firms sufficient to 
obtain a token participation that would comply with 
the civil rights law and allow them to get federal funds. 
Black participation, however, would be limited to no more 
than 10%. Within this limit of 10%, the City or the

11



principal contractor would set the three black firms into 
competition among themselves, forcing the minority architects 
bids downward to a lower than competitive price, thereby 
exploiting the very individuals that the law is designed to

protect.

COMPACT approached Gresham and Smith and stated
that COMPACT, as a minority firm, was now "big enough
to handle major work in excess of the 10% limit. It
asked to participate as a joint venturer, or a member of the
team, with Gresham and Smith. Gresham and Smith declined
to bargain with COMPACT on this basis, and sought instead
to get federal funds by selecting an out-of-state minority
owned architectural firm in Atlanta to whom it could grant

11/
token participation.

Following the refusal of Gresham, Smith and Partners 
to select COMPACT as part of its team or as a minority 
business enterprise participant as required by MNAA's 
policy, or to bargain seriously and in good faith with it,

ia/ COMPACT alleged that MNAA discriminated by denyingMick architectural participation in the design phase between
and 198fin violation o f Federal Civil Rights acts andregulations? ̂ b^employing a i-al white firm^ith^no^irport

architecturaiacontractbfor1design1implementation to the same 

allowed * to W d f  thereafter the white firm applied a non-
to^omplyHbelatedly^ith^he^ederally-mandated^ininorit^ ̂
participation in the second stage. Jt. Appendix

12



COMPACT and its members instituted the instant action under 
federal civil rights statutes 42 U.S.C. §§1981, 1982, 1983, 
1985, 1986, 1988, 2000d; the Sherman Act, 15 U.S.C. §1, and 
the Thirteenth and Fourteenth Amendments to the Constitution 
of the United States.

Defendants are governmental bodies and officials 
responsible for racially discriminatory action in the award 
of contracts for architectural services in the design and 
construction of airport facilities and public schools in 
Nashville and Davidson County, Tennessee, and private parties 
acting as agents of said officials. The defendants are the 
Metropolitan Government of Nashville and Davidson County, 
the Metropolitan Nashville Airport Authority, the Metropolitan 
Board of Education, the Metropolitan Airport, officials of 
the aforementioned public bodies, the Mayor of Nashville, 
Hart-Freeland-Roberts, Inc., Architects & Engineers, and 
Gresham, Smith & Partners.

The complaint prayed for an injunction restrain­
ing defendants from engaging in racial discrimination or 
restraint of trade against plaintiffs, enjoining the MNAA 
and the Metropolitan Government of Nashville and Davidson 
County to engage COMPACT for architectural services in 
conjunction with the design and construction of the terminal 
at the Nashville Airport, and for a judgment awarding damages 
to plaintiffs for their injury.

13



At a hearing on August 17, 1984 on plaintiffs’ 
motion for a temporary restraining order and for a preliminary 
injunction, the district judge opined that the May 31, 1984 
agreement establishing COMPACT violated federal anti-trust 
laws. Thereafter, defendants filed a motion to grant them 
summary judgment. On the basis of the evidence presented 
at the hearing on the motion for a preliminary injunction and 
the depositions and pleadings, the district judge granted, on 
October 18, 1984, partial summary judgment dismissing the 
claims in the complaint in which the district judge held 
that plaintiffs had conspired by doing business as COMPACT, 
i.e., the claims involving the design and construction of 
the Nashville airport.

In support of the partial summary judgment, the district 
court made several findings of fact. First, it found that 
plaintiffs tried to "exert monopolistic leverage on Gresham 
and Smith to force it to accede to COMPACT’S demand for a ^  

more substantial participation share of the design contract" 
(Jt. Appendix I, at 33); that plaintiffs refused to negotiate

12/ The market for architectural work on the Nashville 
"airport was not limited to firms in Tennessee. The initial 
design work on the contract was performed by a venturebetween a Florida architectural firm, Reynolds, Smith and 
Hill, and the Tennessee firm of Gresham and Smith. See 
Jt. Appendix I, at 33, at ft. 3. Similarly, the marke . a minority business enterprise participant was also not 
limited to Tennessee. Gresham, Smith and Partners awarded 
a subcontract to a minority firm William, Russell and Johnson, 
from Georgia. (See Jt. Appendix I, at 43, 49).

14



with defendants on the design contract except through 
COMPACT^ (Jt. Appendix I, at 33); v and that plaintiffs

n /  The testimony of plaintiff L. Quincy Jackson contra- 41' court's assumption that the three firms
comprising COMPACT refused to do business ^ h e r ^ h a n ^  ^
^ ^ tha^I^eSk* individually?511 still have that kind of

aid I still have that right." Jt. Appendrx II,
at 86.

t v, sign testified that the claim that he refusedJohnson also testn o -f compact wasto deal with defendants except a. an agen^|*.C0MPACT based upon a misunderstanding. He said that.
The request for Exhibit 13 was 

not a personal request as by L. Quincy 
Jackson as an individual. This ^for­
mation, as all other information, was 
requested to be sent to COMPACT - the 
group, COMPACT - which w*s_the. gro£Pq_ith that met on the 10th with Gresham & Smith.

The information was sent to me to 
be judged as an individual. I refused to 
accept the package as L. Quincy Jackson. 
Therefore, the package was returned 
several times and I talked with the secretary about the package and the package 
uas nicked up by a member of COMPACT ana 
b i l l e d  by members of COMPACT, and not by L. Quincy Jackson as an individual 
architect. Jt. Appendix I ,

Later, at the hearing on the preliminary injunction, 
Jackson testified that:

I refused to accept the material 
as an individual because I did not request X e  n i a l  as an individual COMPACT
requested the material and I think it 
should have been addressed to COMPAC 
so that all three groups will have the same material and have the same opportu­nity to look at it. As it was so addressed, 
it was only addressed to me. Jt. Appendix 
II, at 108-109.

15



demanded 50% of the design contract (Id. at 34).

Second, the district court found that minority business 
enterprise set-aside shares on public contracts^constitute 
a discrete submarket for architectural services (Jt.
Appendix I, at 35-36), and that, in creating COMPACT,

14/

14/ Desnite the finding of the district court, the
evidence il in conflict on whether or not ^i^St L SSnJy a 50% share of the architectural design contract. • Q YJac£so?rtestimony on this issue illustrates the extent of 
the conflict. The testimony is as follows.

Witness: I meant to make a correction there that someone mentioned in an earlier 
testimony that we wanted a 50% - I 
believe Mrs.McKissack -

Court: Mrs. McKissack left that impression.
Witness: She might have been a little disturbed. 

The first time in a situation like this 
and taking over the situation of tips 
magnitude which she had to do and this 
pressure. We did not discuss how we 
would divide the work up.

What we really discussed that I 
fe]_t that Gresham & Smith might have been afraid of, we insisted almost that 
we have a joint venture because in a 
joint venture, you can designate responsibilities easier than you can 
with an association.

We never discussed how much money 
we would get. It was sort of brought 
out to us at the July 3rd meeting, that 
it was 10% of whatever it was - dating back from '81 to '84. Jt. Appendix II, 
at 118.

15/ The district court held as a matter of law that
S S I  ^ ^ ^ t efrifc«?eS^ I r ^ 1 o r l r ? h i ? : c tural „

i i S  raay c°mp
16



plaintiffs "did not attempt to increase their market power^ 
in the general architectural market for Middle Tennessee"- 
(Jt. Appendix I, at 36).

Third, the district court held that COMPACT imposed 
a "blanket prohibition on its individual members' right to

15/ (Continued)

" a l l

of subcontracts to the fullest exue r s 637(d)efficient performance of this contract. 15 O.S.C.S. Wl
(3) (B) .

COMPACT'S operations extend both to public and private COMPAtl s opeidu No evidence was takensss future
businessPCOMPAcrCcontemplates°private contracts will be.

M et. ^ J a l n t t l f  JacksonagaventS r5 o iS w !S g ’t i s t f ^  on
this issue:

Mv purpose for joining COMPACT 
was to be able to work with minority architects on larger projects and in 
particular projects that were beyond 
the capabilities of small architects 
to work on and because . . .  or tne 
three firm have had in the past and in the present, difficulty in acquir­
ing larger jobs and particularly, those 
jobs that are funded by local, state and 
federal governments.

Most of the jobs that even local 
government permits small firms to do have 
been joint ventures with majority firms.

17



compete for the airport contract . . .  (which) preempted
competition between COMPACT and its members and, also,17/
between the individual COMPACT members themselves" (Jt. 
Appendix I at 42), that net productive capacity of the 
members of COMPACT was reduced, rather than increased, by 
COMPACT'S operations (id at 42); and that COMPACT'S 
demand for a share of the design contract together with 
its members' refusal to negotiate except through COMPACT * I,

16/ (Continued)
. . .  We felt . . . that by 

coming together . . . that we will 
be capable of rendering a service 
throughout the community that is 
compatible to a larger firm. Jt.
Appendix II, at 85-86.

17/ Neither the May 31, 1984 agreement establishing
COMPACT nor COMPACT'S by-laws prohibits members of COMPACT 
from competing against each other. See Jt. Appendix I, at 61, 62,' 86-87. The by-laws of COMPACT states specifically 
that "each individual member of COMPACT is free to pursue their own architectural and other professional activities 
apart from COMPACT and just as if each such member had no 
connection with COMPACT" with the exception of areas 
delineated for joint ventures through COMPACT. Jt. Appendix
I, at 86-87.

Moreover, the only competition specifically prohibited 
by the by-laws or the May 31, 1984 agreement is competition 
on a particular target by any of the individual members against COMPACT after "COMPACT has targeted or is pursuing 
in any way (a project) as a potential contract for COMPACT" 
(the by-laws permit such competition, however, with the 
agreement of all members). See Jt. Appendix I at 87. Plaintiff Jackson explained this provision in the following
way:

If I bring a job to COMPACT and 
say we're going after this particular 
job and if someone calls me the next 
day and say Quincy, I want you to 
participate in the job, I have an

18



"represents a genre of price fixing.
18/ (id at 47) .

17/ (Continued)
an obligation to COMPACT to say no, I 
am with COMPACT and I cannot partici­
pate or will not participate with any­
one on a job separate. Jt. Appendix 
II, at 87.

Jackson also pointed out that:
The difference is that if I come to 
COMPACT as one of its members with 
a large project that I feel that I have 
some insights on, secured with myself 
or with someone else, that we can all 
secure and target after that particular 
project as one unit, yet still be an independent practicing firm. Jt. Appendix 
II, at 86-87.

Jackson's testimony implies that the provisions 
the May 31, 1984 agreement and by-laws which prohibit competition against COMPACT by individual members after 
COMPACT has taken necessary steps to pursue or target a 
oroiect serve to secure COMPACT against the possibility 
S a t  a m e ^ S  might use its insider status in order to 
appropriate inside information which COMPACT used m i  s 
computations and deliberations to target the contract.
5he district judge, in finding against COMPACT on this 
issue did1not^ however, seek to ascertain the extent to which the alleged noncompetitive provisions were used to prevent unauthorized appropriation of inside information 
tendered by the other partners to the joint venture COMPACT.
18/ The district judge seems to have assumed as a matter 
of law that COMPACT'S prohibition of a member firm from 
competiting with it on projects targeted by COMPACT, was 
equivalent to price-fixing. The testimony, however, on the preliminary injunction went the other way. Jackson 
testified that, in the negotiations for the airport design 
"We didn't state any figure. We stated no dollar figur ; 
we stated no percentage." Jt. Appendix II, at 163.

Jackson also stated that:
my expression in the formulation of 

COMPACT . . . was the fact that not only
had my firm been discriminated against on 
a number of occasions, but the Harris

19



The district judge granted summary judgment dismissing 
the claims involving the airport on the ground that the 
agreement among COMPACT members prohibiting the members, in the 
absence of consent, from pursuing contracts targeted, or 
pursued, by COMPACT constituted a contract, combination or 
conspiracy in restraint of trade in violation of section 1 
of the Sherman Act, 15 U.S.C. §1. The court held that 
plaintiffs' actions in forming COMPACT was a per se violation 
of section 1 of the Sherman Act notwithstanding plaintiffs' 
contention that the COMPACT agreement was a joint venture 
subject to the rule of reason test.

The district court also held that the purpose for 
which COMPACT was formed was irrelevant in determining the 
legality of plaintiffs' actions under the anti-trust laws and 
the applicability of the per se rule. Holding that plainitffs' 
activities constituted an illegal horizontal division of a 
submarket and an interference with the free market price 
structure, the district court concluded that granting * I

18/ (Continued)
which was a small firm also had had 
the same problems. And I could see that the McKissack firm had also received 
over the years — therefore, we felt — and ^
I think we all joined together in this 
feeling - that the idea of getting out here trying to earn a dollar per se was 
not our total objective. . . . that we
are definitely trying to break down the 
barrier - you can call these barriers or whatever kind of discrimination you want 
to call them. Jt.Appendix II, at 147.

20



plaintiffs' request for relief would further the objectives 
of an unlawful anti-trust conspiracy and that accordingly 
summary judgment dismissing the claims involving the 
conspiracy was proper and required.

SUMMARY OF ARGUMENT

The central issue in this case is whether plaintiffs' 
right to seek judicial enforcement of the nation's civil 
right against public agencies practicing racial discrimi­
nation can be thwarted by an erroneous application and 
interpretation of federal antitrust laws. This is an 
issue of federal law and policy arising under specific 
federal statutes prohibiting racial discrimination by public 
and private agencies, 42 U.S.C. §§1981-2000d, and under 
provisions of the Small Business Act, 15 U.S.C. §637(d)

i K i v i t f e s  S S S S  =o£ f  e - r -

Presidents Conference v. Noerr Motor Freight, In£., 365 U.S.n ,  MQCi'n --united States v. Pennington, 381 U.S. 657 .
Plaintiffs'claim that the "Airport Authority should be the ones to select the minority” participant (Jt. Appendix II, 
u. 33) and not the private firm of Gresham, Smith an ?Ltn!rs anS that tc the extent that their insrstence upon
M S - ^ i S i n n i '  a°r ^
^HrStictif^SofSTthifihe'soSpS o^lhe Noer-Pennington 
doctrine.

21



»

affirmatively requiring public agencies receiving federal 
funds to accord "small business concerns owned and controlled 
by socially and economically disadvantaged individuals . . .
the maximum practicable opportunity to participate m  the 
performance of contracts let by any Federal agency."

The purpose of the antitrust provisions of the 
Sherman Act, 15 U.S.C. §1, is to help the underdog and the 
powerless against great aggregations of economic, social, 
and political power, and not to provide a sanctuary for 
violators of federal laws prohibiting racial discrimination. 
See remarks of Senator Sherman in support of the Sherman 
Act, 21 Cong. Rec. 2460 (1890) .

in enacting the antitrust law, Congress intended to 
increase diversity, promote pluralism, see remarks of 
Representative Ceiier, 95 Cong. Rec. 11486 (1949), and 
remarks of Senator Kefauver, 96 Cong. Rec. 16452 (1950), 
urging amendment of the merger law, and to give the little 
man and small businesses a clear field and a fairer opportunity 
to try. See remarks of President Wilson stating that the 
passage of the Clayton Act:

(w)ill bring new men, new energies, and 
a new spirit of initiative, new blood, into the management of our great business 
enterprises. It will open the field of 
industrial development and origination 
to scores of men who have been obliged 
to serve when their abilities entitle 

om -t-o direct

Address by President Wilson on Trusts and Monopolies 
before Joint Session of Congress (Jan. 20, 1914), H.R.
Doc. No. 625 63rd Cong., 2d Sess. 5(1914).

22



The United States Department of Justice, the Federal 
Trade Commission, and the Federal courts recognize the need 
to place limits on the use of the antitrust laws. The 
Justice Department follows the rule that antitrust laws must 
be used only against challenged transactions that are 
"inefficient." "Interview with William F. Baxter, Assistant 
Attorney General in Charge of the Antitrust Division, Report 
from Official Washington," 51 A.B.A. Antitrust L.J. 23 (1982); 
"Panel Discussion —  Interview with William F. Baxter," 50 
A.B.A. Antitrust L.J. 151 (1981).

Both the FTC and the Justice Department apply restric­
tions on the use of antitrust laws to joint ventures. The 
FTC approved the joint venture between General Motors, the 
number one auto maker in the world and Toyota, the number 
one auto maker in Japan, to produce a new compact car.
General Motors Corp./Toyota Corp., 48 Fed. Reg. 57246, 57314 
(1983), 49 Fed. Reg. 18289 (1984), 3 CCH Trade Reg. Rep.
5 22,139 (1984). The Justice Department approved a joint 
venture of all of the U.S. automobile companies to develop 
and pool their developments of automobile pollution devxces. 
United States v. Motor Vehicle Manufacturers Ass’n, 1982-83 
Trade Cas. f 65,175 (1982) (liberalizing prior consent judg­
ment) .

Similarly, the merger of LTV Corporation and Republic 
Steel Corporation, the second and sixth largest steel companies 
in the United States, was approved by the Justice Department.

23



The FTC approved a 13 billion dollars acquisition by Standard 
Oil Company of Gulf Oil Company, one of the other "seven 
sisters." United States v. LTV Corp., 1984-2 Trade Cas. 
i 66,133 (D.D.C. 1984)(consent order requiring minor
divestiture). Standard Oil, 3 CCH Trade Cas. 1 22,144 (1984).

In the federal courts, limits have been placed on 
the application of antitrust laws through the use of economic, 
non-interventionist theories that support a minimalist approach 
to antitrust. See Brunswick Corp. v. Riegel Textile Corg., 
1985-1 Trade Cas. 1 66,333 (7th Cir. 1984); United States v. 
Waste Management, Inc♦, 743 F.2d 976 (2d Cir. 1984). See 
generally Easterbrook, "The Limits of Antitrust," 63 Texas L.
Rev. 1 (1984).

In view of this history of the antitrust law, plaintiffs 
submit that the District Court plainly erred in interpreting 
Section 1 of the Sherman Act to find an antitrust violation 
and in dismissing COMPACT'S claims. First, the court erred 
in holding that the alleged antitrust violation was a 
defense to civil rights claims. Second, the court erred in 
adjudicating the alleged antitrust violation before deciding 
the merits of the civil rights claim. Inasmuch as federal 
civil rights law requires defendants to cease racial dis­
crimination in the award of public contracts and to accord 
COMPACT consideration for meaningful participation in 
federally funded contracts, a federal antitrust violation 
cannot be predicated upon acts taken by victims of racial

24



discrimination to secure 
objectives.

compliance with civil rights

Third, the district court erred in holding that the 
May 31, 1984 agreement creating COMPACT organization was a 
per se violation of the antitrust laws rather than subjecting 
it to a rule of reason inquiry or dismissing the antitrust 
defense on the ground that COMPACT had neither the purpose 
nor the power to harm competition either in the general 
market for architectural services or in the market for 
services by minority architectural firms.

Fourth, the district court erred in using summary
judgment to decide the claims and defenses below when there 
was disputed questions of fact. These errors by the district 
court require the Court to reverse the judgment below and
remand the case for trial on plaintiffs' civil rights claim.

ARGUMENT
I.

APPELLEES' ANTITRUST DEFENSE IS NOT 
A DEFENSE TO APPELLANTS' CIVIL RIGHTS _________ CLAIMS________________

The District Court granted partial summary judgment on 
the ground that plaintiff has violated Section 1 of the Sherman 
ACt, 15 U.S.C. § 1, in creating a joint venture, COMPACT, to 
combat racial discrimination in the award of public and 
private contracts for architectural services, and that plaintiffs' 
request for relief in their civil rights claim could not be 
granted without implicating the district court in the execution

25



of an agreement illegal under Section 1 of the Sherman Act.

In deciding against the enforcement of appellants' 
claims as plaintiffs herein, the district oourt purported to 
invoke a legal principle prohibiting courts from granting 
relief on non-antitrust claims if to do so will enforce the 
conduct made illegal by the antitrust laws.

The principal case relied upon by the district court 
to support this decision was Continental Wall Paper Co. v.
Louis Voight & Sons, 212 U.S. 227 (1909). The plaintiff 
corporation there sued to recover for payments due on the sale 
of wallpaper to defendant. Plaintiff however was the sales 
agent for wallpaper companies doing business as a pool and 
selling at excessive prices fixed pursuant to the pool agreement. 
The Supreme Court denied enforcement of the contract on the 
ground that giving relief for the excessive price fixed by 
plaintiff could make the court a party to carrying out a 
restraint prohibited by the Sherman Act.

The holding in Continental Wall Paper Co., v. Louis 
Voight & Sons Co., supra, was expressly qualified in D.R.
Wilder Mfg. Co. v. Corn Products Ref. Co., 236 U.S. 165 (1915).
In this case, plaintiff, the Corn Products Ref. Co., sued 
defendant to recover the price of glucose, or corn syrup, sold 
to it. Defendant, the D.R. Wilder Mfg Co., asserted a defense 
of nonliability on the ground that plaintiff was a combination 
of all manufacturers of glucose, or corn syrup, in the United 
States, illegally organized with the object of monopolizing all

26



dealings in corn syrup or glucose in violation of the anti­
trust laws. Defendant further alleged that the prices 
charged by the monopoly were excessive, and that the totality 
of these facts brought the case within the rule established 
in Continental Wall Paper Co. v. Louis Voight & Sons Co., 
supra.

The Supreme Court rejected this contention. It said 
that Continental Wall Paper Co., supra, was misunderstood and 
clearly inapposite. The Court stated that the assertion 
that the plaintiff refining company had no legal existence 
because it was an unlawful combination in violation of the 
anti-trust laws was irrelevant to the issue of liability for 
payment of the purchase price since such a defense was a 
"mere collateral attack on the organization of the corporation.' 
Id. 236 U.S. at 172. The Court went on to proclaim that 
"this is but a form of stating the elementary proposition that 
courts may not refuse to enforce an otherwise legal contract 
because of some indirect benefit to a wrongdoer which would 
be afforded from doing so, or some remote aid to the accomplish' 
ment of a wrong which might possibly result." Id. (citing 
Connolly v. Union of Sewer Pipe Co., 184 U.S. 540 (1902)).

In response to the argument that the decision in 
Continental Wall Paper Co., supra, required a contrary result, 
The Court said "In the first place, the contention cannot be 
sustained consistently with reason. It overthrows the general 
law/" Id. 184 U.S. at 173. In the second place, the Court

27



said there was "no support afforded to the proposition that
the anti-trust act authorizes the direct or indirect suggestion
of the illegal existence of a corporation as a means of
defense to a suit brought by such corporation on an otherwise21/
inherently legal and enforceable contract." Id. at 176.

Other decisions of the Supreme Court have reached a 
similar result. See, Bruce's Juices, Inc., v. American Can 
Co., 330 U.S. 743 (1947); A.B. Small Co. v. Lamborn & Co., 
267 U.S. 248 (1925). One of the leading cases is Kelly v. 
Kosuga, 358 U.S. 516 (1959). The respondent in Kell*, 
supra, sued petitioner for failure to complete payment for 
the purchase price of onions as required by an agreement. 
Petitioner defended on the ground that the sale was made 
pursuant to and part of an agreement which violated the 
Sherman Act. The district court granted a motion striking 
the defense. Both the court of appeals and the Supreme 
Court affirmed.

The Supreme Court's majority opinion stated that "As a
defense to an action based on contract, the plea of illegality 
based on violation of the Sherman Act has not met with much 
favor in this Court." Kelly v. Kosuga, 358 U.S. at 518. 
Citing D.R. Wilder Mfa. Co. v. Corn Products Ref. Co., supra,

21/ The case of Connolly v. Union Sewer Pipe Co., infra, 
overruled on other grounds in Tigner v. Texas, 310 U.S. 141 
(1940) was also one in which the Supreme Court held that the 
formation of a combination in restraint of trade in violation 
of the Sherman Act did not preclude a company from suing 
upon collateral contracts.

28



the Court stated that it had decided there that "the Sherman 
Act's express remedies could not be added to judicially by 
including the avoidance of private contracts as a sanction." 
Id. 358 U.S. at 519.

The Court emphasized that federal courts should avoid 
"(s)upplying a sanction for the violation of the Act, not m  
terms provided and capricious in its operation." 358 U.S. 
at 521. Quoting, in part Justice Holmer's dissenting 
opinion in Continental Wall Paper Co., v. Louis Voight_&
Sons Co., supra, where the enforceability of a contract was 
at issue, the Court said "Past the point where the judgment 
of the Court would itself be enforcing the precise conduct 
made unlawful by the Act, the courts are to be guided by the 
overriding general policy "of preventing people from getting 
other people's property for nothing when they purport to be 
buying it." Id. 358 U.S. at 520-21. Compare Perma Life 
Mufflers v. international Parts Corp., 392 U.S. 134 (1968). 
See also Chrysler Corp. General Motors Corp., 1985-1 
Trade Cas. 5 66,391 (D.D.C. 1985)(plaintiff's alleged anti­
trust violation is no defense).

Here, the applicable federal policy is set by two 
distinct sets of federal civil rights law. One set, 
embodied in 42 U.S.C. §1981-2000(d) forbids racial discrimi­
nation. The other set, 15 U.S.C. §637(d), requires the 
"maximum practicable opportunity to participate m  the 
performance of contracts let by any Federal agency.

29



The complaint alleges that defendants violated both sets of 
civil rights law. No contention is made, either by the 
court below or by the defendants, that they denied plaintiffs 
participation in the airport contract on the basis of the 
alleged violation of the antitrust laws or even that they, 
defendants, were aware of the alleged violation prior to 
commencement of this action.

The district court refused to entertain plaintiffs' 
civil rights claims solely because of one provision, among 
many, of the May 31, 1984 agreement establishing COMPACT.
That provision, prohibiting individual members firms from 
pursuing projects which are being jointly targeted or pursued 
by them through COMPACT, was not found by the district court 
to be the essence of the May 31, 1984 agreement.

Moreover, the provision was clearly separable from 
other protions of the Agreement. In fact, plaintiffs 
counsel, at the argument on the motion for summary judgment 
on September 7, 1984, specifically stated, on page 43 of 
the transcript of the argument, that "in terms of fashioning 
relief, the Court should simply strike out paragraph 5 of 
the COMPACT agreement which has not been invoked in any 2 2  

fashion as a factual matter and allow the case to proceed.
Jt. Appendix II at 327.

22/ See footnote 13 infra.



In short, the district court below could have granted 
the relief requested by COMPACT without "enforcing conduct 
made unlawful by the (Sherman) Act." Clearly, the anti­
competitive provision was separable from the remainder of the 
agreement. It was neither essential to the agreement nor the 
basis for defendants' refusal to award an architectural 
contract to COMPACT. Moreover, there is no evidence showing 
in fact that any of the member firms of COMPACT refused to 
bid on the airport project because of the anticompetitive 
provision in the May 31, 1984 agreement and the by-laws. 
Plaintiff Jackson testified that his firm did not respond 
to the invitation to the bid because it had been mailed, in 
error, to him as an individual rather than to the party, 
COMPACT, which had requested it.

The anticompetition provision was clearly collateral 
to plaintiffs' claiirs for relief and thus falls squarely 
within the principle of Kelly v. Kosuga, sugra. The anti­
trust defense should therefore be stricken.

Moreover, striking the defense will not prejudice the 
right of defendants to bring a separate suit, or to counter­
claim, for any injury which the alleged anticompetitive pro­
vision might cause to them. If defendants are shown to have

23/ See footnote 13 infra. Moreover, it is unclear to 
what extent a subsequent bid by his firm on the airport proj ect would have been based on confidential information on costs prices, and personnel disclosed by the other two 
member firms in their preparation of COMPACT s bid. See 
footnote 17 infra.

31



violated plaintiffs* civil rights, then plaintiffs are
entitled to a declaratory judgment declaring their rights
and an injunction against defendants' continued wrong- 

24/doing. Defendants' attempt to preserve their freedom
to discriminate by condemning plaintiffs' small, minority- 
business consortium as monopolists trivializes the anti­
trust laws and makes a mockery of civil rights. Accord­
ingly, the judgment below should be reversed.

II.

CIVIL RIGHTS STATUTES PREEMPT INCON­
SISTENT ANTITRUST LAWS AND REQUIRE THE ANTITRUST LAWS TO BE INTERPRETED 
AND APPLIED TO CARRY OUT THE SPIRIT 
AND THE PURPOSES OF THE CIVIL RIGHTS

LAWS___________ ____

The District Court erred in deciding the antitrust 
defense before deciding the civil rights claim, for if 
plaintiffs are entitled to prevail on their civil rights 
claims then the civil rights laws preempt any inconsistent 
antitrust law. If plaintiffs should not prevail on the 
civil rights claim, then any antitrust violation is moot. 
Therefore, the civil rights issues should be addressed first.

24/ We show in this memorandum that COMPACT is plainly 
procompetitive and that such combined efforts to bring new 
talent into a market are encouraged by the antitrust laws. 
But even if, after trial, the Court could find that the 
COMPACT agreement in some way offends the law, the court can 
still fashion relief so as not to further the offense.
25/ The alleged "violation" has had no impact and has 
"caused no injury. In a private antitrust suit there is no

32



Congress may passThe law of preemption is clear, 
legislation inconsistent with a prior statute, such as the 
antitrust laws. When the mandate of the subsequent legisla­
tion cannot be carried out except by displacing principles of 
antitrust, then the antitrust laws are repealed to the extent 
necessary to make the subsequent legislative scheme work. 
United States v. National Association of Security Dealers,
422 U.S. 694 (1975); Gordon v. New York Stock Exchange, 422 
U.S. 659 (1975); Pan American World Airways v. United States
371 U.S. 296 (1963).

Here, Congress has enacted statutes, both before and 
after the passage of the Sherman Act, 42 U.S.C. §1981-2000d 
which prohibit racial discrimination by public or private 
persons, and which require that the "maximum practicable 
opportunity to participate" in federally financed contracts 
be afforded to small minority business enterprises such as 
those of plaintiffs. In the instant action, three small 
minority firms in middle Tennessee have combined to exercise

25/ (Continued) 
violation without impact^
has not been m ]  Private plaintiff has no standing toened with injury, the p ya1Sanovitz v. G. Heileman Brewing chaHenge the violati • ^  Dei. 19bTT See Brunswick
Co., 185-1 Trade cas. ^ / 477 (1977). Here,
S rePri n^h^atened injuryare not the victims of a vrolatron and
have no right to assert a violation.

33



their rights to be free of racial discrimination and to gain 
a fair chance to participate in the market for architectural 
services; their attempt to do so has been wholly unsuccess­
ful in the marketplace, for, as events show, even joining 
together they lack the capacity, or power, to get a meaning­
ful foothold in the market; and then these small minority 
firms are denied a day in court to prove their civil rights 
claim on the ground that their coming together, without 
regard to their purposes in doing so, violates the antitrust 
laws.

26/

26/ During the hearing on the preliminary injunction, the 
following exchange occurred:

Defendants' Counsel: Would it be correct to say. . . that all of these projects 
are projects on which your firm 
has either been the lead architect 
or principally involved in the' 
project?

Witness (Leatrice : Yes.McKissack)
Defendants' Counsel: . . . Boyd Park Community Center;Cameron School; Dudley Park 

Community Center; Easely Memorial 
Center; Goodlettsvilie Elementary 
School; Hadley Park Bandstand;
Hayes Elementary School; Kings 
Lane Elementary School; Lane Garden 
Housing; Meigs School; North 
Nashville Community Center & Branch 
Library; Pearl Senior High School; 
South Street Community Center; -
Tennessee Project 517 and 519 and 
Washington Junior High School.
Aren't all those public projects 
that were funded by tax money here 
in Nashville? Excuse me, and Ford 
Greene Elementary.

Witness: Mr. Leeman, that proves the point 
that I was making.
34



By these statutes, Congress clearly meant to encourage 
and promote whatever action or combination was necessary for 
minorities to obtain meaningful opportunities to participate 
in the market for architectural services. Minority firms 
axe entitled to take those steps necessary to achieve the 
statutory goals. Here, the three minority firms took steps 
in this direction by forming COMPACT (although thus far with­
out success).

Moreover, the undisputed evidence shows that a principal 
purpose for forming COMPACT was to combat racial discrimination 
by enabling the minority architectural firms to work on projects 
that "were beyond the capabilities of small architects."
Jt. Appendix II at 85. Even COMPACT resources were limited, 
however, since the three firms employed only twelve or thirteen 
architects or draftsmen. Jt. Appendix II, at 66. Only seven 
of the architects would have been immediately available for 
work on the Nashville airport project. Id.

In view of COMPACT'S inability to obtain participation 
in the airport contract, the formation of COMPACT as a joint

26/ (Continued)
• • •
Witness: . . .  All these projects were basically

done before 1954 and they dealt with 
housing blacks. Since 1954, if any -- 
if there are any projects on here that we acquired, it was a joint venture with 
a white firm. Jt. Appendix II at 61-63.

35



venture was clearly necessary to protect the civil rights 
of COMPACT and its members and thereby to enforce the civil 
rights laws. Thus, if plaintiffs are correct in their 
contentions concerning the civil rights claims, them any 
inconsistent interpretation or application of the anti­
trust laws would be preempted.

III.

THE COURT SHOULD STRIKE THE ANTITRUST 
DEFENSE ON THE GROUND THAT COMPACT IS 
A PROCOMPETITIVE JOINT VENTURE AND 
THAT THE DEFENSE IS WITHOUT MERIT.

Plaintiffs are small minority businessmen trying to 
get a foothold in the established and often exclusionary 
market of architectural services. The market for archi­
tectural services itself is notoriously non-competitive, 
with prices higher than necessary. Jt. Appendix II, at 128. 
The established majority firms in Tennessee are able to main­
tain this noncompetitive equilibrium by erecting barriers to
the entry of minority firms and others who are not members

2J/of the "club." See Jt. Appendix II at 85-86. They do 
this by systematically steering the important jobs away from 
minorities. Id. at 91. By obstructing the flow of suffi­
cient business, established firms assure that minority firms

27/ See, for an analogue in the legal profession, First, 
""Competition in the Legal Education Industry," 53 N.Y.U.L. 
Rev. 311 (1978) and 54 N.Y.U.L. Rev. 1049 (1979).

36



are too small to win the principal contractor positions. Id. 
at 85-86.

Yet small business, such as the plaintiff firms and 
their joint venture, COMPACT, are the hope for the future of 
competition. They promise to bring new and vital
competitive pressures into the architectural services market. 
Congressional policy recognizes this role for small business.
One expression of this policy is found in the Small Business 
Act. 15 U.S.C. §631 et seq.

It is plain that, if COMPACT succeeds in getting a 
meaningful participation in the airport expansion project and 
thereafter in other projects, it will increase competition by 
adding a new competitor, and it is plain that a legal environ­
ment hospitable to COMPACT and similar ventures will increase 
incentives for minority firms and thereby pave the way to their 
greater participation and to more dynamic price competition in 
the future. See United States v. United Shoe Machinery Corp., 
110 F. Supp. 295, 347 (D. Mass. 1953), aff'd per curiam, 347 
U.S. 521 (1954). The claim that this joint venture will 
lessen competition is meritless on its face and should summarily 
fail.

It is so clear that COMPACT is procompetitive if it 
should get the chance to function in the marketplace that it 
is difficult to understand how the District Court could have 
labeled it a clear violation of law. The Court reached its 
conclusion by misconstruing the facts, failing to draw all

37



%

factual inferences in favor of the non-moving party, and mis­
applying the law, in numerous respects:

For example, the Court viewed COMPACT as if.it were a 
cartel; namely, a combination of competitors to avoid bidding 
against one another and thus to fix a common price. A cartel 
is illegal per se.

The fact is that COMPACT is not a cartel. The members 
of COMPACT come together in order to gain the ability to enter 
a segment of the market for architectural services from which 
they have been constantly rebuffed on grounds of small size.
This is the segment for architectural services as principal 
contractor. They did not come together to eliminate their 
bidding against one another on token jobs traditionally 
offered by local governments and principal majority contractors. 
Jt. Appendix II at 85-86, 118. The evidence offered by 
plaintiffs supports this conclusion.

Thus, defendants have erected a Catch—22. None of the 
three minority firms can get a significant participation alone 
because each is said to be too small to do the job alone. And 
all of the three minority firms cannot get a significant 
participation together because they are said to be antitrust 
violators if they bid together.

*
Fortunately the law is neither so rigid nor so unjust.

If combination is important to enable small competitors to bid 
on a larger job than they could otherwise get, then combination 
is legal under the antitrust laws. National Collegiate

38



Athletic Ass1n v. Board of Regents of University of Oklahoma,
104 S. Ct. 2948 (1984); Broadcast Music, Inc, v. CBS, Inc., 
441 U.S. 1 (1979). See Department of Justice Guide on Anti­
trust and International Operations CCH Trade Reg. Rep. No. 266 
(Feb. 1, 1977) , pp. 3-4 and Case C (Joint Bidding), (reprinted 
in 1 Fox & Fox, Corporate Acquisitions and Mergers, App. 15).

The Court below misread the May 31, 1984 agreement.
It believed that the contract allocated territories. The 
Court construed the clause prohibiting COMPACT members from 
bidding on projects in "areas" targeted by the joint ventures, 
by reading the word "areas" as referring to geographic terri­
tories. In fact, it refers to projects targeted by the joint 
venture. The covenants of the joint ventures were merely 
boilerplate covenants pursuant to which partners agree not to 
undermine the business of their partnership. Such covenants 
have been valid since the days of the old common law. See 
United States v. Addyston Pipe & Steel Co., 85 F.271 (6th Cir. 
1898), aff'd, 175 U.S. 211 (1899); Brunswick Corp., [1979-1983
CCH Transfer Binder] f 21,623 at 21,786 (FTC 1979), aff__d in 
relevant part sub nom. Yamaha Motor Co., v. FTC, 657 F.2d 
979 (8th Cir. 1981), cert, denied sub nom. Brunswick Corp. 
v. FTC, 456 U.S. 915 (1982). Similar covenants have 
been incorporated in the form partnership contract sponsored 
by the American Association of Architects. Jt. Appendix I, 
at 65, Art. 2, Sec. 2.3.

The Court erred in assuming that a legitimate joint

39



venture must involve integration of facilities. Finding
no integration, it viewed the joint venture as se illegal.
While the Court made additional errors in this part of its 
analysis, its principal error was a general misunderstanding 
of the state of the antitrust laws. Antitrust was viewed 
from a point in time when it was rigid, prohibitions were 
overbroad, and technicalities stood in the way of activities 
that were on balance procompetitive. See, Continental T̂ V., 

„ ctf Svivania Inc., 433 U.S. 36 (1977), overruling 
n . , ^  gtat.es v. Schwinn 4 Co., 388 U.S. 365 (1967).

The Supreme Court has now revised this older, more 
rigid approach by narrowing the use of the £er se rule to 
restraints that unambiguously harm competition by decreasing 
output. Thus, in Broadcast Music, Inc, v- CBS, Inc., 441 
U.S. 1 (1979) where an activity involving some price-fixing 
was held not to be per se unlawful, the Supreme Court said:

" ^ Y n ^ u ^ T o c ^ r !  “nd“ h ^ h ! V r a ^ c e  
lacially Appears to be one that would always or almost always tend to restrict competition and 
decrease output. . . . .

Id. at 19-20 (emphasis added).

In the recent case of National Collegiate Athletic * 1

28/

28/ It article. 
Rev. 1523 
ventures, 
efforts o 
to raise Analysis

made this error by referring p r o f e s s o r  Brodley 
"Joint Ventures and Antitrust Policy, 95 Harv.L. 
(1982)f which dealt only with integrativejoint 
In fact a joint venture is any combination of 

,f o? mirS firms other than a cartel J^ement
price and to lower output). See Areeda, Antitrus_
1 360, p. 471 (3rd ed. 1981).

- 40 -



association v- Board of Regents of the University of Oklahoma,
82 L.Ed. 2d 70, 104 S. Ct. 2948 (1984), the Court went farther 
and held that consortia that on their face limit output 
are outside the scope of the per se rule, and are reasonable 
and lawful if the restraint is necessary to make the product 
available or will otherwise increase output and thus be pro- 
competitive. Id. at 82 L.Ed. 2d 83-84, 91-92.

The principle of reasonableness as developed in the 
last eight years in cases such as Sylvania, BMI and NCAA 
provides the lens through which the COMPACT joint venture must 
be viewed.~/ This principle in turn yields the following rules
or guidelines.

First, joint selling agencies and joint bidding consortia 
are entirely lawful if they are not on balance anticompetitive, 
see, Rmadcast Mus i a ■ Inc, v. CBS Inc., su£ra; Appalachian 

v- united States, 288 U.S. 344 (1933); United States 
V. Columbia Pictures Corp., 189 F. Supp. 153 (S.D.N.Y. 1960); 
Department of Justice Guide, su£ra. Second, if the purpose 
of the joint venture is to enter a new market, increase 
productive capacity, and to produce more rather than less, it 
is in essence, presumptively valid. Id.

Even joint bidding consortia among dominant competitors 
may be justified upon a showing that the individual members

?Q/ While the Court below cited BMI and NCAA it did not 
Ully appreciate the significance of the cases to modern
antitrust analysis.

41



cannot alone handle so large a project. See Department of 
Justice Guide, supra, and Department of Justice Press Release,
May 10, 1976, approving the consortium of General Electric 
Company, Allis Chalmers Corporation and Westinghouse Electric 
Corporation to bid jointly to provide turbine generators for 
a major project in Latin America (cited in Guide, supra, at 
p. 21, n.39. Joint bidding consortia may be justified when 
the agency or body letting the contract determines, or
perceives, that the individual firms cannot handle the project

30/ . . .alone. Compare National Collegiate Athletic Association_v.
Board of Regents of the University of Oklahoma, supra.

Where the joint venture is shown to be lawful, either 
because it lacks market power or facilitates a new or different 
kind of market participation (both conditions are plainly met 
in this case), then the next step of the inquiry is to examine 
the covenants in the joint venture agreement to determine if 
they unduly restrain trade.

The covenants that restrict the action of joint venturers 
are tested under a rule of reason. They are lawful if reason­
ably necessary to promote the business of the joint venture. Id 
See Yamaha Motor Corp. (Brunswick) v. FTC, 657 F.2d 971 (8th Cir 
1981), cert, denied, 456 U.S. 915 (1982). In Yamaha/Brunswick,

30/ See also Jerrold Electronics Corp. v. United States, 
187 F. Supp. 545, 557 (E.D. Pa. 1960), aff*d, 365 U.S. 567 
(1961).

42



£ £  P U t ^ i r
venture-related business into the venture and 
“not compete with their progeny• J ^ e ^ u p r e ^
S S  o en necessary t o ^ e

£oJe may escape^  ^ P e n " - ^ ^  7
Chemical Co.. sVu.S. 158, lb* U»b4M7.tes u f ^ im—  nol 1 er Bearrng CO , 83 F. Supp.
284, 312 IN.U. Ohio 1S«I , all d , 341 O.S.^SJ 
(1951).] Trade Reg. Rep. 1 21,6 '

The ancillary covenants not to compete are reasonable if
they are no broader than necessary "to make the joint venture

work." Id.

the FTC said that:

The covenants in this case were adopted solely for the 
purpose of making the joint venture work, and they are reasonable. 
Plaintiffs will establish their reasonableness if given a trial. 
Since plaintiffs were unable, even with the ancillary covenants, 
to affect competition, for better or worse, the Section 1 defens 
is clearly without merit and should be stricken. By refusing to 
take into account the purpose and the effect of the COMPACT joint 
venture, the court erred in determining the legality of the

venture.
, • corfinn 2 of the Sherman Act, whichIn the analysis of Section  ̂ox

prohibits monopolization, the Court erred both in law and in
fact. It found the relevant market to be minority architects
in middle Tennessee. This was a factual error. A relevant
market is an area capable of being monopolized. See Posner,
antitrust Law: An Economic Perspective (1976), Ch. 6, esp.
pp. 125-134. TO test a relevant market hypothesis, one must

43



suppose that the area is occupied by a single firm, one must 
hypothesize that the single firm raises .price to a monopoly price, 
and one must observe whether the firm can profitably maintain 
price at the monopoly level or whether buyers will simply turn 
to other alternatives and thereby beat back the attempt to raise 
price. See 1984 Department of Justice Merger Guidelines, 2 CCH 
Trade Reg. Rep. 1 4225; 1985 Department of Justice Vertical
Restraints Guidelines, 48 BNA Antitrust a Trade Reg. Rep. Ho.1199 
(Special Supplement, Jan. 24, 1985). If buyers will shift to 
other alternatives, the provisional market definition is wrong.
It is underinclusive.

under the Court's hypothesis, COMPACT was the single firm 
in the market. COMPACT sought a participation —  the alleged 
attempt to get a monopoly price. Gresham a Smith, however, 
simply turned to another alternative. The ease of shifting to 
an alternative proves that the Court's market definition was 
wrong. At the very least, the geographic market was drawn too 
narrowly. Market definition thus was an unresolved, or disputed, 
question of fact. The same analysis also proves that COMPACT has 
no market power at all. The undisputed facts prove that COMPACT 
lacks a necessary ingredient of the violation -  monopoly power, 
see H.U.H states v.Grinnell Core-, 384 U.S. 563 (1966). The 
Section 2 defense is therefore also not a bar to the action.

The Court made a second error in assuming that the product 
service market was limited to the airport project, which is the 
only project apart from the convention center that COMPACT has 
targeted. A market may not be so narrow. Section 2 of the

44



Sherman Act prohibits monopolisation of "any part of . . . trade
or commerce." As the Court of Appeals for the Second Circuit has 
recently reaffirmed, the market must be "appreciable." ?riple_M 
unnfing Coro, v. Tramco, Inc., 1985-1 Trade Cas. 166,382 at 64,871 
(2d Cir. 1985). There the Court said, concerning supplies for a 
government contract alleged to have been monopolised:

Very simply, we do not believe that this market 
was7sufficiently 'appreciable' to support a 
claim under the antitrust laws . . . .  lujniess
i-ss* srsTSioSsr 0?i£iSrss&s»af w
S 2 T  wfiSe nothingSwrongbwith^such^a gonopolisf 
Charging any price it wishes. Id.at 64,871-872.

Conduct affecting such an insubstantial market, the court said, 
"dotes] not implicate the economic concerns that properly animate 
the Sherman Act proscriptions." Id. at 64,872.

Civil rights laws show that there is no minority-firm 
submarket. The district court below concluded that a minority 
submarket existed because a civil rights statute required minority 
participation in contracts. But it is inconceivable that the 
congress which enacted this law meant to create antitrust sub- 
markets, with the serious adverse consequences that it would 
entail for beneficiaries of the law. Surely, Congress must have 
contemplated that there would often be only one minority bidder 
in a geographic area, particularly since fewness is itself a 
result of lack of opportunity. It is hardly possible that Congress 
meant to enact a law that would prevent, for example, three small 
minority firms from merging to achieve greater opportunity, 
although such would be the result if there were a minority sub- 
market. Thus, if the Court were otherwise correct in its market

45



analysis, and if a one-project market or a minority market did 
not fail the test of "appreciability," then federal civil 
rights laws would preempt the antitrust principles determining
market definition.

Finally, as a matter of law, even if the Court's "market” 
were a market, there was no abuse of monopoly power, and thus no 
monopolization, because COMPACT'S attempt to compete was compe­
tition on the merits. COMPACT, if successful, as a joint venture, 
would increase competition. Acts and practices that stir up 
competition and add new blood and new ideas to the marketplace 
are procompetitive and are welcomed by the law even where (which 
is not the case here) they are likely to produce or maintain a 
monopoly position. See, e.g., Transamerica Computer Co. v. IBM, 
698 P.2d 1377 (9th Cir. 1983); cert, denied, 104 S. Ct. 370 
,1983); Homme1 Co. v. Ferro CorE ., 659 F.2d 340 (3rd Cir. 1981); 
rali fornia Computer Products, Inc, v. IBM, 613 F.2d 727 (9th Cir. 
3.979) ; Herkev Photo Inc, v. Eastman Kodak Co., 603 F.2d 263 
(2d Cir. 1979), cert, denied, 444 U.S. 1093 (1980); In re E._I.

Pont de Hemours 6 Co., 3 Trade Reg. Rep. 1 21,770 (FTC 1980) 
(titanium dioxide). In short, the antitrust defense is meritless
and should bs stxicksn.

IV.
THE DISTRICT COURT SHOULD HAVE APPLIED 
A NARROW RULE OF REASON IN VIEW OF 
CIVIL RIGHTS LAWS AND POLICIES-- ----

Even where a controlling statute is insufficiently con­
flicting with antitrust to repeal the antitrust laws, its 
policies are entitled to deference in construing the antitrust

46



laws. The District Court, however, failed to give the civil 
rights statutes appropriate deference.

A recent case in point is Hospital Building Company v. 
Trustees of the Rex Hospital, 1982-83 Trade Cas. 3 64,992 (4th 
Cir. 1982), cert, denied, 104 S. Ct. 231 (1984). A health care 
planning statute encouraged private parties to take steps to 
reduce the costs of health care. Meanwhile, Hospital Building 
Company (HBC) sought to expand its facilities and sought a 
certificate of need for construction of new facilities. It 
failed, however, in its quest for the certificate of need. 
Allegedly, a competitor conspired with an insurance company 
to keep HBC from receiving the certificate. HBC sued, alleging 
horizontal market allocations and concerted refusals to deal.
The district court instructed the jury on a per se rule, and 
the jury returned a verdict for the plaintiff.

The appellate court reversed. It held that, even if 
there were horizontal market allocations and refusals to deal, 
the trial court should have applied a limited rule of reason.
The health care planning act was intended to prevent unnecessary 
duplication of hospital facilities. While the planning act 
did not repeal the antitrust laws, the appellate court said, it 
was nonetheless error for the trial court to apply the per se 
rule in the shadow of the planning act.

The District Court erred in failing to apply a tailored 
rule of reason. The court of appeals said that defendants' 
agreements were not reasonable "if undertaken in good faith 
and if their actual and intended effects lay within those

47



envisioned by [the] specific federal legislation . . . ."Id.
at 70,540. As to the claims brought for monopolisation and

. . _  section 2 of the Sherman Act, theattempt to monopolize under sectxo
_ j The defendants had the rightappellate court also found error. The detenu

to prove as a complete defense to the Section 2 claims "that 
they [the defendants, were motivated by intent to avoid 'need­
less' duplication [of hospital facilities] rather than specific 
intent to monopolize." Id- at 70,544.

Thus, the District Court erred in not permitting COMPACT 
to show that is undertook the challenged activity "in good 
faith" to avoid the effects of discrimination, and that the 
■actual and intended effects [of COMPACT, lay within those 
envisioned by (its civil rights claims)."

Since there were unresolved facts as well as disputed 
facts upon which the issues raised herein should be decided, 
the grant of summary judgment was improper.

CONCLUSION

For the reasons stated above, 
Court to reverse the judgment below 
a trial on plaintiffs' claims.

plaintiffs request the 
and remand the case for

Respectfully submitted,

WILLIAMS AND DINKINS 
AVON N. WILLIAMS 
RUSSELL T. PERKINS 
RICHARD D. DINKINS203 Second Avenue, North 

Nashville, Tennessee 37201 
Tel: (615) 244-3988

48



k. <

ELEANOR M. FOX40 Washington Square 
SouthNew York, New York 10012 
Tel: (212) 598-2016

Of Counsel

Dated: March 22, 1985.

JULIUS LEVONNE CHAMBERS 
NAPOLEON B. WILLIAMS, JR. 

99 Hudson Street 
New York, New York 10013 
Tel: (212) 219-1900

Attorneys for Appellants

49



(^•RTTFICATE of service

The undersigned certifies that two copies of the 
foregoing Plaintiffs' Brief On Appeal were mailed to 
Earl Roberts, Esquire, Metropolitan Attorneys, 204 
Metropolitan Courthouse, Nashville, Tennessee 37201,
Samuel W. Bartholomew, Jr., Esquire, and Susan E. McGannon, 
Esquire, 23rd Floor, First American Center, Nashville, 
Tennessee 37238, Barry t. Howard, Esquire, Court Square 
Building, 300 James Robert Parkway, Nashville, Tennessee
37201, Donald W. Jones, Esquire, and Willi- »• Howard' 
Esquire, Metropolitan Attorneys, 204 Metropolitan Courthouse 
Nashville, Tennessee, James D. Luther, Esquire, 204 
Metropolitan Courthouse, Nashville, Tennessee 37201, Jack 
Robinson, Esquire, and Joel Leeman, Esquire, 3rd Floor,
230 Fourth Avenue, North, Nashville, Tennessee 37219,
Peter H. Curry, Esquire, 223 Third Avenue, North, Nashville 
Tennessee 37201 and to George Barrett, Esquire, 217 Second 
Avenue, North, Nashville, Tennessee 37201, this the 22nd

day of March, 1985.

-----— 7^