Court of Appeals Favors Ford in Its Decision

ST. LOUIS, Mo. – A split panel of the Eighth Circuit on appeal reversed a jury verdict that was originally in favor of a limousine manufacturer.

Craftsmen Limousine Inc. took Ford Motor Company to court because the company alleged Ford lobbied to limit membership to a limousine manufacturer trade association, LIMO, because it was not part of Ford’s QVM program, and membership was for those who belonged to it.

In addition, with pressure from LIMO, the leading industry publications refused to accept advertising from non-LIMO members or to allow their presence at industry trade shows, thus preventing Craftsmen from advertising vehicles and supposedly costing the company substantial sales.

Craftsmen argued that the agreement between Ford and the members of LIMO to limit membership and to pressure magazines not to allow advertisement constituted an illegible horizontal restraint of trade, and the jury, which was instructed that such agreements constituted a per se violation of the Sherman Act, agreed and awarded damages to Craftsmen.

On appeal, in a 2 to 1 decision, the Eighth Circuit reversed. In addressing the issue of the proper legal standard, the majority ruled that exclusion through standard setting ordinarily is judged under a rule of reason approach.

In this case, the issue centered around Ford's contention that the standards in question were driven by safety concerns, not efforts to restrain competition.

The majority found that it did not need to determine whether the subject standards actually had pro-competitive effects but rather found that "because the alleged restraints were arguably based, at least in part, on safety concerns, they may have had some pro-competitive effects and thus use of the per se legal standard was inappropriate.