Dibidale of Louisiana, Inc. v. American Bank & Trust Company, New Orleans , 916 F.2d 300 ( 1990 )

POLITZ, Circuit Judge:

Dibidale of Louisiana, Inc. appeals an adverse summary judgment dismissing its complaint that American Bank & Trust and the First National Bank of Houma illegally tied its approval for a loan to its use of a contractor of American Bank’s choosing, in violation of the Bank Holding Company Act (BHCA), 12 U.S.C. § 1971 et seq. Finding that the BHCA, unlike general antitrust statutes, does not include a coercion element, we vacate in part and remand.

Background

In early 1987 Dibidale Securities Establishment (DSE) sought to acquire, through its subsidiary Dibidale, a partially complete townhouse and boathouse development in Louisiana held by the Federal Savings and Loan Insurance Corporation. Robert Wagner, a general contractor serving as FSLIC custodian for the development, informed Dibidale that it would cost an estimated $4,000,000 to complete the project. According to Dibidale agent Nicholas Popich and architect Leonard Spangenberg, Dibidale was prepared to award the contract to Wagner when it obtained the loan needed to acquire and complete the development.

Popich contacted Peter Butler, a director and attorney for American Bank, to initiate loan negotiations. What occurred in the course of those negotiations forms the core of the instant dispute. According to affidavits filed by Spangenberg and Popich, Butler informed them by telephone that American Bank wanted National Building and Contracting Co., headed by Ronnie J. Theri-ot, to be the general contractor or project manager for the development. Spangen-berg and Popich traveled to New Orleans to discuss the loan and were introduced to Theriot by an American Bank agent. American Bank and First National were under common ownership at the time. In the course of the negotiations with American Bank Popich met with Butler, William Whitmore, CEO of both American Bank and First National, and Abel Caillouet and Robert Blanchard, officers of both banks.

American Bank agents, including Whit-more, allegedly advised Spangenberg and Popich on several occasions about Theriot’s reliability and encouraged them to hire him for the project. According to Popich, Ther-iot’s name was mentioned at every negotiation session and Whitmore made it clear that American Bank would feel “comfortable” in making the loan if Theriot were hired. In a later meeting Butler informed Popich that American Bank was very desirous that Theriot get the job. While conceding that no one from American Bank ever expressly stated that hiring Theriot was a condition of the loan, Popich asserts that this was apparent and implicit in the negotiations with the bank.

Popich and Spangenberg finally decided that Dibidale would hire Theriot; American Bank issued its loan commitment letter the day after it learned of this decision. Unbeknownst to Dibidale, First National purchased a participation in the loan. Section 6.03 of the loan agreement required Dibi-dale to certify that it had chosen National Building from among "numerous possible general contractors” and that Dibidale “was not coerced or forced by [American Bank] in any manner” to do so.

Dibidale alleges that during the negotiations American Bank and Whitmore withheld material facts about Theriot and National Building’s financial condition. As CEO of First National Whitmore was aware that Theriot owed that bank over $3,000,000, which he could not pay. Whit-more also was aware that during the course of negotiations with Dibidale, Theri-ot and National Building’s debt with First National had been reorganized, with National Building assigning all of its accounts receivable to First National.

Almost a year after he was hired Theriot informed Dibidale that he could not complete the project for $4,000,000 as per their contract, but would require an additional $1,400,000. Dibidale borrowed this sum from American Bank. When Theriot advised Dibidale, one month later, that additional funds again would be required, Dibi-dale dismissed him and his company. According to Dibidale, some $2,000,000 in construction liens currently encumber the project, despite Theriot’s having been paid $250,000 more than the $4,873,766 contract price.

American Bank and First National paint a very different picture. They contend that Dibidale has fabricated its allegations in a blatant attempt to avoid the consequences of its subsequent default on the American Bank loans.

Dibidale filed suit against American Bank, First National, Whitmore, Caillouet, Frederic, National Building, and Theriot, claiming violations of the anti-tying provisions of the BHCA, 12 U.S.C. § 1972, along with pendent state claims. Holding that the proscriptions of section 1972 apply only to banks, the district court dismissed Dibi-dale’s federal claims against Whitmore, Caillouet, Frederic, and Theriot as individuals, but retained pendent jurisdiction over the state claims. DSE filed a similar claim against American Bank, Whitmore, Cail-louet, Frederic, and First National. American Bank filed a separate suit in state court against Popich as personal guarantor of the loan. Popich removed the case to federal court. The district court consolidated the three cases in accordance with Local Rule 1.051E.¹

American Bank, which initially had filed a motion to dismiss Dibidale’s federal anti-tying claims, was granted leave to convert that motion into one for summary judgment. First National joined that motion. Analogizing to the Sherman Antitrust Act, which requires a showing of coercion under similar anti-tying provisions, the district court concluded that Dibidale’s allegations, even if true, failed to prove that American Bank had forced Dibidale to choose Theriot as its contractor. The district court thus dismissed the claims of both Dibidale and DSE based on section 1972 and further dismissed all of Dibidale’s remaining state law claims, including those against the individual defendants.

Dibidale filed a motion for reconsideration. While that motion was pending the district court entered its final judgment dismissing Dibidale’s claims, but did not certify the judgment pursuant to Fed.R. Civ.P. 54(b). Dibidale filed a notice of appeal from this judgment, after which the district court entered its order denying Dibidale’s motion for reconsideration. Dibi-dale, however, did not file a second notice of appeal. Subsequent to oral argument the district court issued an appropriate Rule 54(b) judgment. Dibidale timely appealed that judgment which is also now before us.

Analysis

1. Jurisdictional threshold.

Subsequent to the filing of briefs on the merits of this case we requested supplemental letter briefing on appellate jurisdiction. Specifically, we inquired whether certification of the judgment from which Dibidale had appealed was required under Fed.R.Civ.P. 54(b) and, if certification was not required or was otherwise obtained, whether Dibidale’s motion for reconsideration rendered its earlier notice of appeal ineffective under F.R.A.P. 4(a)(4). As noted, the district court’s subsequent issuance of a certified judgment pursuant to Rule 54(b), and Dibidale’s subsequent timely appeal have rendered the first portion of this issue moot.

The appellees contend nonetheless that the Rule 54(b) certification must apply retroactively to the district court’s original judgment, thus rendering Dibidale’s earlier notice of appeal premature and its most recent notice of appeal untimely. We are not persuaded. Until the issuance of the qualifying Rule 54(b) judgment, no final judgment existed from which Dibidale could take an appeal. Accordingly, Dibi-dale’s notice of appeal from the district court’s post-argument judgment properly has invoked our jurisdiction.

2. Anti-tying claims—the proper legal standard under section 1972.

Section 1972(1) contains five subsections, each prohibiting a slightly different form of tying arrangement. In both its brief on appeal and at oral argument Dibi-dale has professed its reliance upon section 1972(1)(D), which provides that

A bank shall not in any manner extend credit, lease or sell property of any kind, or furnish any service, or fix or vary the consideration for any of the foregoing, on the condition or requirement—

(D) that the customer provide some additional credit, property, or service to a bank holding company of such bank, or to any other subsidiary of such bank holding company....

12 U.S.C. § 1972(1)(D). Dibidale alleges that by making the hiring of Theriot a condition or requirement for its loan, American Bank required Dibidale to provide a service to its affiliate First National, which held all of Theriot’s accounts receivable.²

Dibidale contends that the district court erred in requiring it to demonstrate that it was forced to hire Theriot in order to prevail on its claim. While conceding that it is appropriate as a general rule to analogize to the general antitrust statutes in interpreting section 1972, Swerdloff v. Miami Nat’l Bank, 584 F.2d 54 (5th Cir.1978), Dibidale urges caution in light of the absence from that section of the market power and anti-competitiveness elements required in more generalized antitrust claims. The “condition or requirement” language of section 1972 does not indicate whether a plaintiff has to prove that it was coerced — i.e., forced — to accept a tying arrangement in connection with a loan, or whether merely proving the existence of the condition or requirement is sufficient to state a claim. Where the statute’s plain language provides no clear answer we may look to legislative history for guidance. 2A Singer, Sutherland Statutory Construction § 48.06 (1984).

Each of the general antitrust statutes contains a provision that prohibits certain conditional transactions, or tying arrangements, in which the seller of one product (the tying product) conditions the sale of that product on the consumer’s purchase or provision of another (the tied product). 15 U.S.C. § 1 (Sherman Act section 1); 15 U.S.C. § 14 (Clayton Act section 3); 15 U.S.C. § 45 (Federal Trade Commission Act section 5). Although the scope of these provisions encompasses the banking industry as well as commerce in general, their applicability in the banking context is problematic. See 9 E. Kintner and J. Bauer, Federal Antitrust Law, § 68.6 at 135-136. First, Clayton Act section 3 regulates only the sale or lease of goods, not services. Second, recent case law imposing stricter evidentiary burdens on Sherman and Clayton Act plaintiffs, see Jefferson Parish Hosp. Dist. No. 2 v. Hyde, 466 U.S. 2, 104 S.Ct. 1551, 80 L.Ed.2d 2 (1984); United States Steel Corp. v. Fortner Enterprises, Inc. (Fortner II), 429 U.S. 610, 97 S.Ct. 861, 51 L.Ed.2d 80 (1977), renders successful tying claims under these statutes difficult to attain. Third, the unique nature of the banking industry renders it more important to prohibit conditional transactions in that context than in other less sensitive sectors of the economy. Kintner & Bauer, § 68.6 at 136.

Congress enacted the anti-tying provisions of the BHCA “to provide specific statutory assurance that the use of the economic power of a bank will not lead to a lessening of competition or unfair competitive practices.” S.Rep. No. 1084, 91st Cong., 2d Sess. 16, reprinted in 1970 U.S. Code Cong. & Admin.News 5519, 5535. The economic power of the banking industry stems from the aggregate control of banks over credit.³ In light of this unique economic role that banks play, Congress perceived conditional transactions involving credit as inherently anti-competitive, operating to the detriment of banking and non-banking competitors alike; thus the anti-tying provisions were intended to regulate conditional transactions in the extension of credit by banks more stringently than had the Supreme Court under the general antitrust statutes. S.Rep. No. 1084, 1970 U.S. Code Cong. & Admin.News at 5558 (Letter of Assistant Attorney General Richard McLaren). See Fortner Enterprises, Inc. v. United States Steel Corp. (Fortner I), 394 U.S. 495, 89 S.Ct. 1252, 22 L.Ed.2d 495 (1969) (stopping short of declaring tie-ins involving credit to be illegal per sé).

Central to this more stringent regulation of the banking industry was Congress’s decision to exclude from the bank anti-tying provisions the market share and anti-competitiveness requirements which were the cornerstone of tying claims under the general antitrust statutes. To establish an illegal tying arrangement in violation of section 1 of the Sherman Act a plaintiff must establish: (1) that the defendant possesses market power over the tying product sufficient to force {i.e. coerce) the consumer into purchasing a tied product or engaging in a reciprocal deal with the seller; and (2) that the alleged arrangement forecloses “a substantial volume of commerce.” Jefferson Parish Hosp., 466 U.S. at 13-16, 104 S.Ct. at 1558-60. In contrast, a plaintiff claiming an unlawful tie-in or reciprocal dealing requirement under section 1972 may recover without demonstrating the tying bank’s market power or the anti-competitive effect of the alleged arrangement. See Bruce v. First Federal Sav. & Loan Ass’n, 837 F.2d 712 (5th Cir. 1988); Campbell v. Wells Fargo Bank, N.A., 781 F.2d 440 (5th Cir.), cert. denied, 476 U.S. 1159, 106 S.Ct. 2279, 90 L.Ed.2d 721 (1986); Parsons Steel, Inc. v. First Alabama Bank, N.A., 679 F.2d 242 (11th Cir.1982); Costner v. Blount Nat’l Bank, 578 F.2d 1192 (6th Cir.1978); but see McGee v. First Fed’l Sav. & Loan Ass’n, 761 F.2d 647 (11th Cir.), cert. denied, 474 U.S. 905, 106 S.Ct. 273, 88 L.Ed.2d 234 (1985) (applying the Sherman Act Jefferson Parish standard).

The fact that Congress, in enacting the anti-tying provisions of the BHCA, sought to regulate a specific industry out of a recognition of that industry’s aggregate economic power and unique economic role, undergirds our interpretation of the “condition or requirement” language central to Dibidale’s appeal. To restrict the scope of those words to tying arrangements in which a seller is literally forced to purchase or provide a tied product or service in order to obtain credit would vitiate that section’s intended role for, as Congress recognized, a tying arrangement may squelch competition whether coercive or not:

[T]ie-ins may result from actual coercion by a seller or from a customer’s realization that he stands a better chance of securing a scarce and important commodity (such as credit) by “volunteering” to accept [or provide] other products or services rather than seeking them in the competitive market place. In either case, competition is adversely affected, as customers no longer purchase a product or service on its own economic merit.

Reciprocity, which involves the induced provision of products and services by the customer rather than his acceptance of other products and services, may also come about in these involuntary or “voluntary” manners.

Conf.Rep. No. 1747, 91st Cong., 2d Sess., reprinted in 1970 U.S.Code Cong. & Admin.News 5561, 5569 (emphasis added).

Nonetheless, American Bank and First National contend that Congress deliberately excluded these “voluntary” tying arrangements from the scope of section 1972 when it adopted the so-called Bennett amendment. As originally drafted, section 1972 prohibited banks from extending credit on the “condition, agreement, or understanding” that the customer would accept or provide some other product or service. The Bennett amendment replaced these words with the phrase “condition or requirement.” As the comments of Senator Bennett make clear, however, the purpose of the amendment was to exclude from the scope of section 1972 the extreme ease in which a plaintiff alleges nothing more than the mere simultaneity of transactions between bank and borrower:

The elimination of the words “condition or understanding,” and the substitution of the word “requirement,” are intended to eliminate possible inferences and implications of tie-ins and exclusive dealing arrangements based on a bank’s performance of two or more services for a particular customer, or the bank’s providing a service to the customer and receiving a deposit or other service from the customer at the same time. The bill as amended would require that a condition or requirement imposed by the bank must be demonstrated in order to prove that a violation of the section has occurred.

116 Cong.Rec. 32124, 32125.

Unlike the general marketplace where the power to coerce a consumer to accept a tying arrangement is directly related to the market power of the proposed coercer, in the banking industry the power to coerce is inherent in the banking relationship itself, regardless of an individual bank’s market power. The transaction costs associated with establishing or severing a banking connection, as well as the loss of confidential financial data that can result from a banking change, dissuade frequent changes. See Leonard, Unfair Competition Under Section 106 of the Bank Holding Company Act, 94 Banking L.J. 773, 787 (1977). This environment, which provides a suitable climate for the imposition of “voluntary” tying arrangements, is a far cry from the tying paradigm of the general antitrust statutes with its emphasis on market power and coercion. The district court erred in overlaying this coercion requirement on its analysis of Dibidale’s allegations under section 1972. Dibidale need only have alleged, as it did, that hiring Theriot was a “condition or requirement” of its obtaining the loan from American Bank.

3. Genuine issue of material fact.

Applying the correct standard under section 1972(1) to the summary judgment evidence presented, it appears that Dibidale has adequately presented a genuine issue of material fact as to whether hiring Theriot and National Building was a condition or requirement of the American Bank loan.⁴ The banks contend that Popich’s deposition testimony unequivocally states that Wilmore Whitmore, CEO of both American Bank and First National, never expressly imposed hiring Theriot as a condition or requirement of the loan. They urge this court to ignore Popich’s subsequent affidavit outlining the circumstances under which this requirement for obtaining the loan allegedly was communicated to Dibidale.

The deposition testimony by Popich, on which American Bank and First National heavily rely, states:

For the record, though, [Wilmore Whit-more] never once told me to give [Theri-ot] the work in spite of anything. You know, I am familiar with this complaint and all, so we’ve talked about it. So you have to understand what I’m saying. I cannot say that Mr. Whitmore said on behalf of the Bank you give Ronnie the work. But we’re all business people. He wanted Ronnie to have the work. He was comfortable with that; I was comfortable with that. The Bank, as far as I was concerned, was supportive of Ronnie; good enough for the Bank, he was good enough for me.

Subsequently, in response to the banks’ motion for summary judgment Dibidale submitted an affidavit in which Popich stated in part:

Leonard Spangenberg and I believed that Wagner was better qualified for the job primarily due to his familiarity with the project, but because Dibidale wanted the loan from the American Bank, which was strongly urging the use of Theriot throughout the loan negotiations and since we had no adverse information about Theriot, Dibidale did not protest the selection of Theriot as the project manager/general contractor. We mistakenly believed that if Theriot was good enough for the American Bank, he was certainly good enough for our project.

In reviewing a motion for summary judgment the court must consider all of the evidence before it, including affidavits that conflict with deposition testimony. A genuine issue of material fact may be raised by such an affidavit “even if it conflicts with earlier testimony in the party’s deposition.” Kennett-Murray Corp. v. Bone, 622 F.2d 887, 893 (5th Cir.1980) (citing 6 Moore’s Federal Practice II 56—15[4] at 56-522 (2d Ed.)). Nor, for that matter, is Popich’s affidavit necessarily inconsistent with his deposition testimony. Read in the light most favorable to Dibidale as the non-movant, both documents assert that American Bank succeeded in making clear its intentions without flagrantly violating the law.⁵ To the extent they exist, discrepancies in those averments present credibility issues properly put to the trier-of-fact. Kennett-Murray, 622 F.2d at 894. Credibility assessments are not fit grist for the summary judgment mill. Dibidale’s evidence, both direct and circumstantial, including the fact that American Bank approved the loan one day after Dibidale hired Theriot, renders summary judgment inappropriate herein. We do not now resolve this genuine issue of material fact; that remains for the trier-of-fact.

4. Retained jurisdiction over the individual defendants.

Finally, Dibidale contends that the district court erred in dismissing Whitmore, Caillouet, Frederic, Theriot, and National Building on the grounds that the anti-tying provisions of the BHCA impose liability on banks, rather than individuals. As Dibi-dale concedes, every court considering the issue has accorded the provisions this interpretation. See Tose v. First Pennsylvania Bank, N.A., 648 F.2d 879, 898 n. 23 (3d Cir.), cert. denied, 454 U.S. 893, 102 S.Ct. 390, 70 L.Ed.2d 208 (1981); Rae v. Union Bank, 725 F.2d 478, 480 (9th Cir.1984); Blue Line Coal Co. v. Equibank, 683 F.Supp. 493, 495 (E.D.Pa.1988); Nesglo, Inc. v. Chase Manhattan Bank, N.A., 506 F.Supp. 254, 265 (D.P.R.1980). Inasmuch as the BHCA defines banks as institutions, 12 U.S.C. § 1841(c), and Congress specifically elected to regulate individual conduct by way of civil administrative penalties elsewhere in section 1972, 12 U.S.C. § 1972(2)(F)(i), we reach the same conclusion. In this particular we perceive no error in the district court’s judgment.

The district court’s grant of summary judgment is VACATED IN PART and the matter is REMANDED for further proceedings not inconsistent herewith.

1 . Local Rule 1.05IE of the Eastern District of Louisiana provides:

In order to promote judicial economy and conserve judicial resources, and to avoid the potential for forum shopping and conflicting Court rulings, all [collateral proceedings and refiled cases] shall be transferred to the section to which the matter having the lowest docket number has been allotted....

2 . Dibidale’s reliance on section 1972(1 )(D) renders irrelevant the banks' claims that it failed to present evidence of an unusual banking practice that falls within the purview of section 1972. The unusual banking practice element is a requirement only of complaints lodged under section 1972(1)(C), in which a bank imposes the condition or requirement “that the customer provide some additional credit, property, or service to such bank [the bank providing the loan], other than those related to and usually provided in connection with a loan, discount, deposit, or trust service....”

3 . According to Senator Edward Brooke, the premise underlying the bank anti-tying provision was "‘a disturbing trend in the past year toward erosion of the traditional separation of powers between the suppliers of money — the banks — and the users of money — commerce and industry.’ ” 1970 U.S.Code Cong. & Admin. News at 5557. (Supplementary Views of Senator Brooke (quoting statement of then-President Richard Nixon).)

4 . The banks’ contention that the parol evidence rule precludes Dibidale from raising these allegations in light of language in the loan agreement stating that Dibidale hired Theriot of its own free will is without merit. The terms of the loan agreement notwithstanding, the relevant issue is whether Dibidale has provided sufficient evidence that its hiring of Theriot was a condition or requirement of the loan so as to survive the banks' motion for summary judgment.

5 . Dibidale further asserts that Popich's deposition testimony must be read in light of the fact that immediately after Popich made the quoted statement the deposition was recessed for a time to pursue settlement negotiations.