author: WEIS, Circuit Judge. JAMES HUNTER, III, Circuit Judge

text:
    UNITED STATES of America, Appellee, v. Wilbert Eugene PROFFITT, Appellant.
    No. 73-1756.
    United States Court of Appeals, Third Circuit.
    Argued Feb. 26, 1974.
    Decided May 20, 1974.
    As Amended July 17, 1974.

      Ronald Ervais, Becker, Fryman & Ervais, Philadelphia, Pa., for appellant.
    S. John Cottone, U. S. Atty., Scranton, Pa., Harry A. Nagle, Asst. U. S. Atty., Lewisburg, Pa., for appellee.
    Before HUNTER and WEIS, Circuit Judges, and MILLER, District Judge.
   OPINION OF THE COURT

WEIS, Circuit Judge.

Our consideration of this case is focused on the extent to which a trial judge may enforce his authority to insist upon an orderly and expeditious trial.

The appeal is from three separate findings of contempt imposed during the course of a prosecution for attempted escape from the Lewisburg Penitentiary for which the defendant Proffitt and one Bagley had been indicted.

From the very beginning of the proceedings, the defendant determined upon a policy of obstructionism in order to delay his trial. His strategy was not to engage in violent or outrageous conduct but to employ a type of passive resistance through noneooperation.

The campaign began with his arraignment on March 15, 1973 when Proffitt refused to enter any plea to the charges brought against him. Through counsel, he then requested the appointment of a psychiatrist, but when the consultation was arranged for the day before trial, the defendant refused to cooperate despite the recommendation of his lawyer.

The selection of jurors for the joint trial of Bagley and Proffitt was scheduled for July 3, 1973. Just before that process was to begin, Proffitt advised the judge that his case could not proceed because the psychiatrist had not made an examination. Furthermore, he stated that he wished to discharge his court-appointed lawyer and secure other counsel.

The court rejected both grounds for delay and refused to appoint new counsel because of the imminence of trial. When the defendant then announced his intention to represent himself, the trial judge directed that Mr. Orso, his previous counsel, serve on a standby basis. The defendant stated that he would not talk further with his attorney.

The court then proceeded with impaneling of a jury. After the 28 prospective jurors gave brief biographical sketches in open court as was the practice in the district, Proffitt and counsel for Bagley were asked if they had any challenges for cause. Bagley’s lawyer said he had none, but Proffitt refused to answer. The trial judge then asked the defendant again if he thought any of the prospective jurors should be disqualified because of their backgrounds, pointing out that the eourt of its own motion had already dismissed one person who had a relative employed at the prison. Defendant replied, “I don’t feel that I wish to pick a jury” and said the clerk could do it. The trial judge then warned the defendant that if he did not answer the question, the court would consider a contempt action and that it had the right to impose a jail sentence of up to six months and a fine of $500. The defendant made a number of evasive statements, purported not to understand, but did not answer the direct question.

In order to fill the vacancy caused by the dismissal of the one juror, another was called. When asked if he had any objection to this juror, Proffitt again refused to cooperate and said that he would not pick the jury.

After the twelve jurors were selected, the trial judge then found Proffitt in criminal contempt and sentenced him to 30 days imprisonment.

Selection of alternate jurors then commenced, and the defendant was asked if he had any objection to those who had been interviewed. Proffitt claimed that he had not been listening, and the judge then requested the prospective alternates to repeat the data which they had previously given.

Again the judge repeated the question and warned the defendant that he might be held in further contempt for failure to answer. Proffitt continued his evasive tactics and did not respond to the direct question. He was then found guilty of a second contempt and sentenced to a consecutive sentence of 45 days imprisonment.

Before testimony commenced, a motion for severance was made by the co-defendant Bagley on the grounds that Proffitt’s conduct would be prejudicial to a fair trial. The motion was granted, the Bagley trial went forward, and Proffitt’s was postponed.

On July 10, 1973, at the direction of the court, a psychiatrist was sent to the prison to examine the defendant to determine whether he was competent to stand trial rescheduled for a date some two weeks thereafter. Proffitt refused to submit to a psychiatric interview and instead presented to the doctor a written statement alleging that he might incriminate himself.

At a later time, the defendant was given notice of a hearing on a charge of contempt arising out of this latter incident. A hearing was held on August 6, 1973, at which time testimony was taken and the defendant gave his version of the incident. At the conclusion of the hearing the trial judge found defendant to be guilty of contempt and imposed a four month sentence.

The trial of the prison breach indictment ultimately began on August 7, 1973.

This appeal involves two distinct types of criminal contempt. The first category covers the conduct which occurred in the courtroon in the presence of the judge, and the second was that which occurred at the prison when the judge was not present.

The misconduct in the courtroon was subject to summary disposition by the court upon a proper certification as provided by Fed.R.Crim.P. 42(a). The procedure followed in this case complied with the rule. Since the sentence imposed was less than six months, no jury trial was required. Frank v. United States, 395 U.S. 147, 89 S.Ct. 1503, 23 L.Ed.2d 162 (1969).

The trial judge treated the refusal to answer questions about the selection of the twelve original jurors as one offense, though two separate and distinct incidents occurred. After that part of the proceeding had been completed and Proffitt had been sentenced, the selection of alternate jurors took place. This was treated as a separate part of the trial and the prospective alternate jurors were required to recite the same type of biographical information as had those previously impaneled. The defendant did not refuse to answer the judge’s questions about this group when requested but simply replied that he had not been listening to the jurors.

Thus, Proffitt did not take the position at that time of “carving out” an area of inquiry which he had previously delineated, the situation in Yates v. United States, 355 U.S. 66, 78 S.Ct. 128, 2 L.Ed.2d 95 (1957). His response prompted the trial judge to ask the prospective jurors to repeat their background information. Only after this had been done did Proffitt assert that he didn’t care who would be picked. What the defendant had accomplished therefore was to cause further delay in the trial before returning to the ground of his original objection. If he had “carved out” an area of refusal to respond to questions, it was waived by this misleading answer to the judge’s question. Furthermore, the trial judge perceived Proffitt’s tactics not so much as an attempt to withhold information as was true in Yates v. United States, supra, but rather as another separate and distinct action to delay the trial. Failure to counter that tactic would have led to further obstruction. See In re Chase, 468 F.2d 128 (7th Cir. 1972); United States v. McCloskey, 359 F.2d 788 (2d Cir. 1966).

Rule 42(b) provides for disposition upon notice and hearing when the contempt was not committed in the presence of the court. Pursuant to these requirements, Proffitt was duly given notice of a hearing, appeared at that time, and participated in his defense by cross-examination of the government witnesses and presentation of his own testimony. Here again, the sentence imposed was less than six months. Since different procedures were followed and the actions forming the basis for the contempt grew out of separate and distinctively different incidents, there need be no cumulation of the sentences. Therefore, even though the sentences for the three separate contempts totaled 6 months and 15 days, no jury trial was required for any or all of the offenses. See United States v. Seale, 461 F.2d 345 (7th Cir. 1972).

Although his counsel on appeal claims that defendant did not receive a copy of the order of July 10, 1973 before the psychiatrist appeared at the prison, there is no evidence to support such an assertion, and the defendant’s prepared statement which he read to the doctor on July 11, 1973 refers specifically to the order. It is significant that this point was not raised at the hearing in the district court. After a thorough review of the transcripts of the proceedings in the district court, we find no procedural irregularities in the contempt proceedings in either category.

Basically the issue which underlies this ease is the extent to which the trial judge may use the power of contempt to prevent delay in the trial of a case. It is unfortunate that the use of the term “contempt of court” has tended to convey the erroneous idea that punishment is to be imposed because of an affront to the personal dignity of the judge. The correct view of the nature of the offense which emphasizes the importance of the need to be served is found in the opinion of Lord Justice Salmon in Morris v. Master Of The Crown Office [1970] 2 W.L.R. 792, 801:

“The sole purpose of proceedings for contempt is to give our courts the power effectively to protect the rights of the public by insuring that the administration of justice shall not be obstructed or prevented.”

The American Bar Association’s “Standards Relating to the Function of the Trial Judge,” § 7.1, likewise explains the nature of the judge’s authority:

“Inherent power of the Court.
“The court has the inherent power to punish any contempt in order to protect the rights of the defendant and' the interest of the public by assuring that the administration of criminal justice shall not be thwarted. The trial judge has the power to cite and, if necessary, punish summarily anyone who, in his presence in open court, willfully obstructs the course of criminal proceedings.”

It is true that when the defendant’s actions in this case are viewed as isolated incidents, and in comparison with some of the more violent episodes of courtroom disruption of recent years, e. g., Mayberry v. Pennsylvania, 400 U.S. 455, 91 S.Ct. 499, 27 L.Ed.2d 532 (1971), and In re Dellinger, 461 F.2d 389 (7th Cir. 1972), the happenings seem mild and perhaps not so willful or flagrant as to merit punishment by incarceration. But the incidents here were not the results of inadvertence, ignorance, or misguided advocacy. The trial judge was confronted with what he perceived to be a deliberate, calculated plan to delay the trial and thus obstruct the work of the court. The fact that threats, shouting, or violence were not employed did not make the tactics less effective. Proof of this is that as a result of the defendant’s intransigence his trial had to be severed and then continued for several weeks, all of which resulted in unnecessary delay and prolongation of total trial time. A molasses defense is often better than a muscular one.

The defendant’s protestations of inability to understand, for example, what the trial judge wished him to do in connection with the selection of a jury may appear not unreasonable when reading the unexpressive record, but appellate courts should not forget that credibility looms large here and the printed words do not reveal the smirk, the sneer, or the clearly felt, though perhaps nonarticulated intent of the defendant.

The defendant cites the case of Pennsylvania v. Fletcher, 441 Pa. 28, 266 A.2d 727 (1970), as authority for the proposition that he should not be found in contempt for failing to answer the trial judge’s question. The state Supreme Court held that a layman should not always be held to the same standards as an attorney when failing to respond to what may seem unfair questions of legal strategy. We need not consider that case at any length because it is clearly distinguishable from the one sub judice where the conduct has been found to be not innocent but motivated by a plan to obstruct and delay.

Appellate courts must be particularly careful to see that the rights of a defendant have not been violated when the trial judge exercises his summary power to punish. This does not mean, however, that we must undermine and curtail the power of the trial court so that it loses its ability to function effectively. Conditions in the cool, intellectual atmosphere of an appellate courtroom where counsel advance reasoned arguments are quite different from those in the trial arena. Criminal defendants, particularly, are most unwilling participants in the judicial process and understandably are more interested in other considerations than the orderly disposition of their cases.

The trial judge is called upon to apply an understanding of the defendant’s viewpoint, make certain that his rights are not violated, and strain the outer limits of patience. Nonetheless, the judge must be firm as well as fair because otherwise he is derelict in his duty to properly administer the laws.

The record in this case indicates that the trial judge was restrained, did not act hastily or out of personal pique, and issued fair warnings to the defendant in the courtroom before adjudging him in contempt. We find no need to disturb the findings and sentences of contempt with respect to the two incidents in the courtroom.

The circumstances surrounding the failure to cooperate with the psychiatrist on July 11, 1973 do present some different considerations, but the decision reached by the trial judge after a hearing will be affirmed.

At the hearing on August 6, 1973, the defendant candidly admitted that he had been wrong to refuse to cooperate with the psychiatrist. He said:

“At the time I didn’t know I had to submit to such an examination. Since then, I’ve looked into some lawbooks and I know I should have submitted to the examination, but I didn’t feel like I was in contempt.”

Nevertheless, Dr. Einig, one of the government witnesses, testified that he talked to Mr. Proffitt on the afternoon before the psychiatrist was to visit and advised him that there was a possibility of contempt of court charge if the defendant did not cooperate. Proffitt claimed that he decided not to cooperate on the basis of legal advice from another inmate. The question of the credibility of the defendant at the hearing was important, and the judgment on that crucial issue was entrusted to the trial judge. There is nothing in the record of this case which leads us to think that the trial judge was other than justified in refusing to accept Proffitt’s version of the incident and instead deciding that this was one more chapter in the defendant’s overall strategy of obstruction.

The judgments of the district court will be affirmed.

JAMES HUNTER, III, Circuit Judge

(concurring in part and dissenting in part):

I agree with the majority’s affirmance of the first summary contempt citation under Rule 42(a) and I also agree with its affirmance of the finding of contempt that occurred on August 6, 1973. However, I do not believe that the second summary contempt citation, that is, the one relating to appellant’s lack of cooperation in the selection of alternate jurors, should be affirmed. Accordingly, I feel constrained to register my partial dissent.

The refusal to answer separate successive questions of a court can undoubtedly support separate findings of contempt. However, this Court has indicated that,

“[wjhere the separate questions seek to establish but a single fact, or relate to but a single subject of inquiry, only one penalty for contempt may be imposed.”

I feel that this rule should be applied here.

In this case, appellant’s lack of response to two separate questions formed the basis for the district court’s two summary contempt citations. While the district court phrased and rephrased the two questions in slightly varying ways, it essentially made the following inquiries: 1) Do you object to any of the prospective jurors because of their backgrounds? and 2) Do you object to any of the prospective alternate jurors because of their background? The issue to be resolved is whether or not these two questions “relate to but a single subject of inquiry” ? I believe they do.

While the two questions are distinguishable as relating to different groups of prospective jurors, I do not believe that our ability to make this technical distinction should be dispositive. The more important consideration is whether the party being questioned could have reasonably viewed the two questions as related to separate subjects.

When the issue is viewed from this perspective, I can only conclude that appellant perceived the selection of jurors and alternate jurors as part of a single process — that is, the jury selection process. Thus, when the questioning switched from the demand that he object to jurors, to the demand that he object to alternate jurors, he perceived no change in the “subject of the inquiry.” This new line of questioning, from appellant’s viewpoint, was but a reiteration of the original demand — that is, that he participate in the selection of jurors. As a result, I would hold that the questions giving rise to appellant’s two acts of defiance related to a single subject of inquiry and that the second finding of contempt cannot stand.

Moreover, I note that the same result appears to be dictated by a slightly different rule of law first enunicated in Yates v. United States, 355 U.S. 66, 78 S.Ct. 128, 2 L.Ed.2d 95 (1957). In that case, the court held that once a witness has “carved out” an area in which he refuses to respond to questions, the refusal to respond to further questions that are within that defined area will not support additional contempt citations.

The application of this rule here seems apparent. When asked repeatedly to participate in the selection of jurors, appellant responded by saying at various times, “[t]he clerk can do it. I have no wish to pick a jury.” (July 3, 1973, Transcript at 2); " . . . I have nothing to do with the jury. You all can pick it.” (Tr. at 5); “I am not going to pick the jury. ... I don’t think I am competent to pick a jury.” (Tr. 6). In my opinion, these statements indicate a clear intent to “carve out” as an area of nonresponse all questions that require him to participate in the jury selection process.

Furthermore, while we would be technically correct if we held that appellant’s statements failed to specifically extend his defiance to questions that related to the selection of alternate jurors, such a holding would not only ignore appellant’s intent, it would also tend to undercut the policies that form the basis for the Court’s opinion in Yates Appellant is not a laywer and nothing in the record indicates that he has a high degree of legal sophistication. Therefore, he should not be held to a literal reading of the words he uses when he “carves out” an area of non-response. Moreover, I again note that we are dealing with summary contempt proceedings so that any substantial doubts should be resolved in appellant’s favor. As a result this second rule of law leads me to the same conclusion — that the second summary contempt citation is improper.

Finally, I feel constrained to note that while I concur in the affirmance of the first summary contempt citation, I feel the issue is extremely close. As this court recently noted,

“summary contempt power can constitutionally reach ‘only such conduct as created “an open threat to the orderly procedure of the court and such a flagrant defiance of the person and presence of the judge before the public” that if “not instantly suppressed and punished, demoralization of the court’s authority will follow.” ’ ” Jessup v. Clark, supra, 490 F.2d at 1071.

As I read the transcript of the proceedings that occurred on July 3, 1973, I find it difficult to conclude that appellant’s conduct created such a serious threat. However, I do note that the events occurred in the presence of the prospective jurors and that the district court had the benefit of demeanor evidence in judging appellant’s intentions and his effect on the proceedings. As a result, I cannot conclude that the district court was clearly erroneous when it found that appellant intended to obstruct the proceedings or when it concluded that the behavior had to be immediately suppressed.

However, I do feel that the district court may have had an alternate route available to it. A summary contempt citation is an extreme remedy and should only be used when more moderate means fail. In this case, appellant’s responses to the court, supra at page 1131 suggest the possibility that he was merely trying to waive his right to participate in the selection of the jury.

Despite this plausible interpretation of appellant’s statements, however, no attempt was made by the district court to ascertain whether this was his true intent nor was any attempt made to lay the basis for a knowing waiver. I believe the district court could possibly have acted on the assumption that appellant’s responses constituted a noncontemptuous waiver and have pursued this course until its inappropriateness became clear. Only then would it have been necessary to resort to a summary contempt citation. While in fairness to the district court, I should note that it may have acted in response to circumstances that are not apparent from the record, I do urge generally that use of the summary contempt power be viewed as an extreme step, to be taken only when other more moderate methods of dealing with disruptive situations have failed.

      . Apparently there was no real animosity between the defendant and his lawyer because at the time the case was eventually tried, defendant admitted there was nothing personal involved.

      . While the defendant’s statement probably would have been an effective waiver of his right to challenge for cause, it is obvious that the trial judge wished to forestall a claim by Proffitt that a guilty verdict could not stand because the jury had not been properly selected. Appellate decisions in recent years understandably have caused trial judges to be uncertain as to the effectiveness of a technical waiver by a pro se defendant.

      . These sentences were vacated on July 16, 1973 and reimposed on July 17, 1973 because the district court wished to rectify its omission of July 3, 1973 of failing to advise the defendant of his right to appeal. At that hearing, the defendant was given the opportunity to explain his conduct or to make a statement in mitigation of the offense.

      . “Criminal No. 022373-15. Reasons for not submitting to examination.
      “I feel that the court did in effect conclude that I was competent to stand trial when the court proceeded with the selection of the jury on July 3, 1973, which now places me in the position of self-incrimination should I disclose any facts about myself to any officer or employee of the court concerning this case. I stand on my Fifth Amendment right against self-incrimination.
      “I also feel that the court is no longer concerned with whether or not I was mentally incompetent at the time the alleged crime was supposed to have been committed, and that the court’s main intent is now to cover its mistake of July 3, 1973 of concluding me competent to stand trial, which conclusion will be reversible error should appeal in this-case become necessary.
      “The order issued July 10, 1973 is clearly an attempt of the court to find me competent to waive my right to counsel, which counsel has a definite conflict of interest in this case under the circumstances; therefore, I am my own counsel and under my own advise refuse to permit myself to examination that I feel would be a violation of the Fifth Amendment and a hindrance to the defense of my case.
      “(Criminal No. 022373-15) The trial of this case is begun. /S/ Wilbert Eugene Proffitt.”

      . In Codispoti v. Pennsylvania, - U.S -, -, 94 S.Ct. 2687, 2692, 40 L.Ed.2d - (1974), the Supreme Court said, “That the total punishment meted out during trial exceeds six months in jail or prison would not invalidate any of the convictions or sentences, for each contempt has been dealt with as a discrete and separate matter at a different point during the trial.”

      . At one point the judge remarked, “Well, it is my view that Mr. Proffitt’s attitude is one of intentionally attempting to thwart the process of this court, and I’m not going to permit it.” On another occasion the judge said, “Well, you see, you are not trying to pick this jury, and you have discharged your counsel, and your objective is to delay this whole proceeding. Now you are not going to get away with it.”
      In the Certificate and Order dated July 5, 1973, the district judge stated that “It is the view of the court that the defendant intentionally set out on July 3, 1973 to obstruct the trial of his case and that the court was obliged to punish his contumacious behavior so that the administration of justice would not be thwarted either during the drawing of the jury or the subsequent trial itself.”
      At the hearing on July 17, 1973, after advising the defendant that there would be a hearing on his failure to submit to psychiatric exam pursuant to the order of July 10, 1973, the court said, “And if you are in violation of that order, the court is going to impose another sentence for contempt, and the way you are smirking at me indicates that you think you are going to be able to thwart this court’s operation, but you are not. I’m going to continue to impose contempt sentences just as long as you violate the orders of this court.”

      . When a jury was selected for the rescheduled trial, the defendant cooperated in the process and intelligently exercised his right to challenge several of the prospective jurors for cause.

      . The defendant also argues that the testimony at the contempt hearing by the psychiatrist who had been appointed to examine him violated 18 U.S.C. § 4244 (1949), which provides in part:
      “. . . No statement made by the accused in the course of any examination into his sanity or mental competency provided for by this section, whether the examination shall be with or without the consent of the accused shall be admitted in evidence against the accused on the issue of guilt in any criminal proceeding . . . ”
      The psychiatrist’s testimony did not violate this section because no § 4244 examination had taken i)lace. Proffitt simply delivered liis written statement to the psychiatrist (see note 4) and discussed his reasons for refusing to undergo the examination. The psychiatrist did not pursue the interview and did not formulate a report on Proffitt’s sanity or mental competency. The testimony only concerned Proffitt’s refusal to submit to the psychiatric examination, and hence there was no breach of § 4244.

      . United States v. Orman, 207 F.2d 148, 160 (3d Cir. 1953), cited with approval in, Yates v. United States, 355 U.S. 66, 73, 78 S.Ct. 128, 2 L.Ed.2d 95 (1957).

      . Furthermore, since a summary contempt proceeding under Rule 42(a), “dispenses with procedural safeguards ordinarily deemed essential to fair criminal trials,” its scope is “severely restricted.” Jessup v. Clark, 490 F.2d 1068, 1071 (3d Cir. 1973). As a result, I feel that any substantial doubt on the issue should be resolved in appellant’s favor. United States v. Kamin, 135 F.Supp. 382 (D.Mass.1955).

      . Appellant’s underlying motive in refusing to participate in this aspect of the proceedings might have been to obstruct their progress (as the district court found), to effect a waiver of his right to challenge jurors, or to simply avoid a confusing situation. However, regardless of his underlying motive, the absence of any perception on his part of a change in subject matter when the district court’s focus shifted from the selection of jurors to the selection of alternate jurors appears plain from 'a reading of the record.

      . Indeed, the district court’s phrasing of the second question at times suggests that even it did not perceive the selection of jurors and alternate jurors as separate matters of inquiry. On two occasions, the district court asked that the defendant exercise his right to object to “jurors” when, in fact, the jurors had already been selected and all that remained was the selection of alternate jurors.

      . In that case, the court explained its holding as follows:
      “The Government admits, pursuant to the holding of United States v. Costello, 2 Cir., 198 F.2d 200, that only one contempt would result if Mrs. Yates had flatly refused on June 26 to answer any questions and had maintained such a position. We deem it a fortiori true that where a witness draws the lines of refusal in less sweeping fashion by declining to answer questions within a generally defined area of interrogation, the prosecutor cannot multiply contempts by further questions within that area. The policy of the law must he to encourage testimony; a witness willing to testify freely as to all areas of investigation hut one, should not he subject to more numerous charges of contempt than a witness unwilling to give any testimony at all.” 355 U.S. at 73. (Emphasis added.)

      . I believe that the majority fails to take this into account and that this causes them to interpret appellant’s words in an overly technical and narrow way. As a result, technical legal consequences never contemplated by appellant are drawn from his specific words and actions. See majority opinion at page 1127.

      . See note 3 supra.

      . Moreover, the fact that it may be difficult to establish the technical requirements for a knowing waiver should in no way excuse a district court from undertaking this task when a defendant wishes to exercise his right of waiver. For this reason I disagree with any contrary conclusion that might be drawn from footnote 2 of the majority opinion.


source: Caselaw Access Project

author: BREITENSTEIN, Circuit Judge.

license: Public Domain

text:
    Joe Albert LITTLEFIELD, also known as Joe A. Littlefield, and Bernadine M. Littlefield, Plaintiffs-Appellants, v. WALT FLANAGAN AND COMPANY, a/k/a Walt Flanagan & Co., Inc., et al., Defendants-Appellees.
    No. 73-1661.
    United States Court of Appeals, Tenth Circuit.
    Argued March 18, 1974.
    Decided June 18, 1974.

      Wm. H. Hazlitt, Denver, Colo. (Weller, Friedrich, Hickisch & Hazlitt, Denver, Colo., on the brief), for plaintiffs-appellants.
    Edward B. Towey, Denver, Colo., entered an appearance for the defendantsappellees but filed no brief and made no argument.
    Before BREITENSTEIN, SETH and DOYLE, Circuit Judges.
   BREITENSTEIN, Circuit Judge.

The issue is whether an action for rescission under the Truth in Lending Act, 15 U.S.C. § 1635, is barred by the one-year period of limitations contained in § 1640(e). The district court held that the action was barred. We reverse.

On November 25, 1970, plaintiffs-appellants contracted with defendant-appellee Perlmutter Associates, Inc., for the purchase of real property to be used by them as a residence. As part of the purchase price, purchasers gave to Perlmutter, the seller, a note for $9,260.-13 secured by a second deed of trust on the property. Perlmutter assigned these instruments to defendant-appellee Walt Flanagan and Company. Although the purchase and sale was a consumer credit transaction within the purview of the Truth in Lending Act, 15 U.S.C. § 1601 et seq., none of the disclosures required by the Act were made by the seller to the purchasers. After purchasers defaulted on payments, Flanagan threatened foreclosure. Purchasers learned of their statutory right to rescind on February 20, 1972, and on the next day notified Perlmutter, the seller, that they chose to exercise the right. Defendants ignored the notice and on March 3 notice of foreclosure was published on the demand of Flanagan. Purchasers filed this suit on April 7, 1972, and sought an injunction against foreclosure, recovery of the civil liability provided by 15 U.S. C. § 1640, and rescission under 15 U.S.C. § 1635.

The district court granted a preliminary injunction barring the foreclosure sale. The seller, Perlmutter, and its assignee, Flanagan, then filed in this court a petition for mandamus to require the vacation of the injunction and the dismissal of the district court action. The district court entered orders maintaining the status quo during the mandamus proceedings. On June 28, 1972, the petition for mandamus was denied. See No. 72-1350, Flanagan and Company v. Arraj. On July 12 default was entered against all defendants. On September 28 Judge Arraj vacated the default, ordered an answer on the merits only within five days, and forbade the assertion of any counterclaim. From the bench he sharply criticized what he called “the arrogance of counsel for the defendants” and said that if permissible he would assess $300 as a sanction against defendants. The answer then filed raised the bar of the § 1640(e) statute of limitations.

The case was heard by Judge Finesilver who held that as to both the civil liability and rescission claim jurisdiction was dependent on § 1640 and failed because of the one-year limitation which ran from the date of the transaction.

The statutory scheme of the Truth in Lending Act “is within the power granted to Congress under the Commerce Clause.” Mourning v. Family Publications Service, Inc., 411 U.S. 356, 377, 93 S.Ct. 1652, 1665, 36 L.Ed.2d 318. Section 1337, 28 U.S.C., gives the district courts “original jurisdiction of any civil action or proceeding arising under any Act of Congress regulating Commerce * * * .” It follows that jurisdiction lies under § 1337.

So far as pertinent here the Act provides in § 1635(a), that in a consumer credit transaction in which a security interest is retained or acquired on residence property, except a first lien to finance acquisition (see § 1635(e), the obligor has the right to rescind “until midnight of the third business day following the consummation of the transaction or the delivery of the disclosures required under this section * * *.” The creditor is required to “clearly and conspicuously” disclose to the obligor his rights under § 1635, and shall provide “an adequate opportunity to the obligor to exercise his right to rescind any transaction” subject to the section.

We have here a consumer credit transaction with an acquired security interest, a second lien on real property used as a residence. Regulation Z promulgated under the Act, 12 C.F.R. § 226.9, details rules relating to notification by the seller to the purchaser of his right to rescind. Defendants ignored these rules. When the purchasers notified the seller of their desire to rescind, the seller gave no reasonable opportunity for the exercise of that right.

The question then is whether the § 1635 claim is barred by § 1640(e). In its subsection (a), § 1640 creates a specified civil liability for failure to make the disclosures which the Act requires. Subsection (e) reads:

“Any action under this section may be brought in any United States District Court, or in any other court of competent jurisdiction, within one year from the date of the occurrence of the violation.”

In Stevens v. Rock Springs National Bank, 10 Cir., 497 F.2d 307, we said that “the disclosure requirements [of the Act] may be satisfied without penalty at any time prior to the contracting to extend credit, and no violation can occur until such a credit contract is executed,” and held that an action for § 1640 liability was barred when the action was brought more than one year after the closing of the purchase transaction. The Stevens opinion expressly left undecided any relationship between the right of rescission under § 1635 and the § 1640(e) limitation period. Wachtel v. West, 6 Cir., 476 F.2d 1062, cert. denied 414 U.S. 874, 94 S.Ct. 161, 38 L.Ed.2d 114, also enforced the one-year limitation in a § 1640 action and left open the application of that limitation to a § 1635 action.

Stevens v. Rock Springs National Bank disposes of the § 1640 claim of the purchasers because the action was brought more than one year after the consummation of the transaction. The applicability of the limitation to a § 1635 claim was not decided by either Stevens or Wachtel v. West, and is apparently a matter of first impression in federal appellate courts. There is no helpful legislative history. See Palmer v. Wilson, N.D.Cal., 359 F.Supp. 1099, 1103-1104.

Section 1640(e) by its express terms applies only to actions to enforce § 1640 rights. Section 1635 has no provision limiting the time for suit. The three-day provision of that section does not apply because the creditor did not disclose to the obligor his right to rescind. The Act is designed to prevent “unscrupulous and predatory creditor practices,” is remedial, and must be liberally construed to effectuate the intent of Congress. N. C. Freed Co., Inc. v. Board of Governors of the Federal Reserve System, 2 Cir., 473 F.2d 1210, 1214, cert. denied, 414 U.S. 827, 94 S.Ct. 48, 38 L.Ed.2d 61. The purchasers brought this suit about six weeks after they learned of their right to rescind. Whatever detriment might be suffered by defendants is their own fault because they chose to flaunt the statute. The purpose of the Act is furthered by permitting, rather than barring, the suit.

The fact that the rescission notice went to Perlmutter, the assignor of second lien holder Flanagan, is immaterial. Section 1635 requires that notice of intent to rescind be given to the creditor and Perlmutter was the creditor under the definition in § 1602(f). In our opinion the § 1635 rescission claim is not barred by § 1640(e) or otherwise and may be maintained. The district court erred in dismissing it.

One point remains. Judge Ar-raj in vacating the default against defendants said that if it were permissible he would impose a sanction of $300 against defendants. The matter was not pursued further because of Judge Fine-silver’s dismissal of the action. The imposition of conditions in an order vacating a default is a device frequently used to mitigate any prejudice which plaintiff may suffer by allowing defendants to plead. 10 Wright, Fed.Pract. and Proc. §§ 2699 and 2700. On remand the district court shall determine what, if any, sanction shall be imposed in the light of the objectives of the Truth in Lending Act and the delays which the actions of the defendants have caused in this case.

Reversed and remanded for further proceedings in the light of this opinion. The mandate shall issue forthwith.

      . Section 1635(a) reads:
      “Except as otherwise provided in this section, in the case of any consumer credit transaction in which a security interest is retained or acquired in any real property which is used or is expected to be used as the residence of the person to whom credit is extended, the obligor shall have the right to rescind the transaction until midnight of the third business day following the consummation of the transaction or the delivery of the disclosures required under this section under this part, whichever is later, by notify-under this part, whichever is later by notifying the creditor, in accordance with regulations of the Board of his intention to do so. The creditor shall clearly and conspicuously disclose, in accordance with regulations of the Board, to any obligor in a transaction subject to this section the rights of the obligor under this section. The creditor shall also provide, in accordance with regulations of the Board, an adequate opportunity to the obligor to exercise his right to rescind any transaction subject to this section.”


author: TRASK, Circuit Judge:

text:
    CHISHOLM BROTHERS FARM EQUIPMENT CO., Plaintiff-Appellant, v. INTERNATIONAL HARVESTER COMPANY, Defendant-Appellee.
    No. 71-3012.
    United States Court of Appeals, Ninth Circuit.
    May 17, 1974.
    Rehearing Denied July 9, 1974.

      Joseph M. Alioto (argued), Maxwell M. Blecher, Peter J. Donnici, Joseph L. Alioto, Brian O’Dea, Lawrence E. Alioto, San Francisco, Cal., Howard D. Humphrey, of Cosho & Humphrey, Boise, Idaho, for plaintiff-appellant.
    Noble K. Gregory (argued), John A. Sutro, Allan N. Littman, Dennis K. Bromley, of Pillsbury, Madison & Sutro, San Francisco, Cal., Willis C. Moffatt, of Moffatt, Thomas, Barrett & Blanton, Boise, Idaho, for defendant-appellee.
    Before ELY, TRASK and WALLACE, Circuit Judges.
   TRASK, Circuit Judge:

Chisholm Brothers Farm Equipment Co. (Chisholm) appeals the District Court’s directed verdict in favor of International Harvester Co. (Harvester). Jurisdiction in the trial court for this civil antitrust action for treble damages was predicated upon Section 4 of the Clayton Act, 15 U.S.C. § 15. Appellate jurisdiction lies pursuant to 28 U.S.C. § 1291. We agree with the District Court that Chisholm presented insufficient evidence to submit to a jury in support of its claims of violations under Sections 1 and 2 of the Sherman Antitrust Act, 15 U.S.C. §§ 1, 2, and affirm the judgment below.

Until the business was sold in 1968, appellant was an independent dealer, located in Cassia County, Idaho, engaged in selling and servicing trucks and farm equipment manufactured by appellee. Chisholm had operated as a franchisee of Harvester since 1940, and, in 1944, had opened a second dealership in Minidoka County, Idaho. This second dealership was subsequently sold to one Cameron who, in turn, eventually entered into an arrangement with Harvester that converted his business into a “co-dealership.” Under this arrangement, 75 percent of the stock of Cameron Sales, Inc., (Cameron Sales) was owned by Harvester, while Cameron received 25 percent of the stock. The stock controlled by Harvester constituted all of the voting stock of Cameron Sales. Cameron served as president of the corporation and, with several employees of Harvester, was a member of its board of directors. The board established policy. As the executive officer, Cameron hired and fired and set the sale prices for specific items.

Chisholm alleges that, beginning in 1961, representatives of Harvester instituted a series of practices designed to coerce Chisholm to lower its retail prices and, thereby, increase profits for Harvester at the wholesale level through a larger volume of sales. Appellant maintains that upon its refusal to comply, Harvester conspired with its subsidiary, Cameron Sales, and used its control of the latter to fix its prices at a level below that charged by Chisholm, with a resultant loss of business by appellant. Appellant contends, further, that a third participant in this conspiracy was Smith Brothers Implement Co. (Smith Brothers), another independent dealer selling and servicing Harvester’s farm equipment in Cassia County, Idaho. Chisholm alleges that Harvester allowed Smith Brothers to operate at an overhead lower than that incurred by appellant, and that Smith Brothers was permitted to maintain, in violation of its franchise agreement, inadequate service facilities. Harvester is also said to have “oversold” Smith Brothers so as to cause that dealership to reduce sharply its retail prices in order to move its inventory-

In 1968, the Chisholm dealership, by then a losing enterprise, was sold to GEM International (GEM), a corporation owned by two individuals and Harvester in accordance with appellee’s co-dealership program. Shortly thereafter, appellant filed this suit against Harvester, and charged appellee with vertical price fixing (resale price maintenance), conspiracy to monopolize, and attempt to monopolize — violations of Sections 1 and 2 of the Sherman Act, 15 U.S.C. §§ 1, 2. After the presentation of Chisholm’s case-in-chief, the District Court concluded that Chisholm’s evidence was insufficient to support any reasonable inferences of liability under the antitrust laws, and granted Harvester’s motion for a directed verdict.

As appellant reminds us, the Supreme Court has admonished that summary procedures, including directed verdicts, should be used “sparingly in complex antitrust litigation where motive and intent play leading roles .” Poller v. Columbia Broadcasting System, Inc., 368 U.S. 464, 473, 82 S.Ct. 486, 491, 7 L.Ed.2d 458 (1962); accord, Cornwell Quality Tools Co. v. C. T. S. Co., 446 F.d 825, 832 (9th Cir. 1971), cert. denied, 404 U.S. 1049, 92 S.Ct. 715, 30 L.Ed.2d 740 (1972). Nevertheless, if an antitrust plaintiff, as well as any other plaintiff, does not present enough evidence within his case-in-chief to support a reasonable finding in his favor, a district court has a duty to direct a verdict in favor of the opposing party. Brady v. Southern Ry., 320 U.S. 476, 479-480, 64 S.Ct. 232, 88 L.Ed. 239 (1943); Washington v. United States, 214 F.2d 33, 41 (9th Cir.), cert. denied, 348 U.S. 862, 75 S.Ct. 86, 99 L.Ed. 679 (1954). When considering the propriety of the grant or denial of a motion for directed verdict, the correct standard is whether or not, viewing the evidence as a whole, there is substantial evidence present that could support a finding', by reasonable jurors, for the nonmoving party. Butte Copper & Zinc Co. v. Amerman, 157 F.2d 457, 458 (9th Cir. 1946). “Substantial evidence is more than a mere scintilla.” Consolidated Edison Co. v. NLRB, 305 U.S. 197, 229, 59 S.Ct. 206, 217, 83 L.Ed. 126 (1938); Butte Copper & Zinc Co., supra. The evidence must be examined in a light most favorable to the nonmovant, Continental Ore v. Union Carbide & Carbon Corp., 370 U.S. 690, 696 & n. 6, 82 S.Ct. 1404, 8 L.Ed.2d 777 (1962), and there can be no weighing of evidence. Tennant v. Peoria & Pekin Union Ry., 321 U.S. 29, 35, 64 S.Ct. 409, 88 L.Ed. 520 (1944) . Finally, appellant here is entitled to the benefit of all reasonable inferences that may be drawn from its evidence. Standard Oil Co. v. Moore, 251 F.2d 188, 198 (9th Cir. 1957), cert. denied, 356 U.S. 975, 78 S.Ct. 1139, 2 L.Ed.2d 1148 (1958).

With these considerations in mind, we now review the sufficiency of appellant’s case.

Violations of Section 1 of the Sherman Act

Relying heavily upon Albrecht v. Herald Co., 390 U.S. 145, 88 S.Ct. 869, 19 L.Ed.2d 998 (1968), appellant contends that Harvester engaged in resale price maintenance by combining with Cameron Sales and Smith Brothers in an attempt to force Chisholm to lower its retail prices. The argument fails for two reasons. Unlike in Albrecht the evidence does not establish a desire or effort by Harvester to fix the prices to be charged by Chisholm. Nor does the interplay between appellee and its dealers Smith Brothers and Cameron Sales amount to concerted action designed to force compliance by Chisholm.

To support its contention that Harvester had coerced Chisholm to lower its prices, appellant introduced three reports written by a Harvester representative, zone manager Calvin Johnson, which reflected Johnson’s opinion that Chisholm’s business difficulties were caused, in part, by appellant’s failure to price competitively in a buyer’s market. The reports were written in 1962, 1966, and 1967, and were solely internal documents directed toward Johnson’s superiors; they were from Johnson to Harvester and not to Chisholm. Johnson recommended termination of the Chisholm franchise, as appellant was “not willing to sacrifice profits to move goods” and was not interested in selling except “at or near list price.” Appellant also exhibited documentary evidence indicating an interest, by Johnson’s superiors, to discuss “seriously” his termination suggestions. Moreover, appellant demonstrated that the Chisholm brothers, after indicating a receptivity to suggestions by Harvester, had been told by Harvester representatives that their problems were caused by a failure to move their inventory and their insistence upon refusing to sell whenever a profit would not be realized. Yet the Chisholm brothers also were advised of several other alternatives that might possibly have improved their financial condition. Thus, Harvester recommended a reduction in excessive expenses, a reduction in excessive used merchandise received in “barter” or trade-in transactions, and even the assumption of a more optimistic and aggressive attitude. The Chisholm brothers themselves testified that they were not told at what prices they were to sell Harvester’s products; at best, Harvester representatives only advised them of a need to “meet competition.”

This evidence pales in comparison with the proof deemed sufficient to establish coercion in the classic resale price maintenance cases. Thus, for example, in Albrecht v. Herald Co., 390 U.S. 145, 88 S.Ct. 869, 19 L.Ed.2d 998 (1968), the dealer, upon raising his prices above that suggested by the Herald Co., was informed by the latter that the newspaper company was entering into direct competition with Albrecht, its dealer. Moreover, Albrecht was threatened with termination if he continued to overcharge, and was told that he could have his customers back only if he charged the suggested price. 390 U. S. at 147-148. Similarly, in this court’s decision in Girardi v. Gates Rubber Co. Sales Division, Inc., 325 F.2d 196 (9th Cir. 1963), there was testimony that the recalcitrant dealer had been expressly threatened with cancellation by a representative of the manufacturer after he had begun to deviate from Gate’s suggested resale prices. 325 F.2d at 198. The dealer was cancelled, and, further, there was evidence that the manufacturer pursued a systematic policy of refusing to deal with distributors who did not comply with its suggested price schedule. Id. at 202. Here, appellant’s evidence does not directly prove or give rise to reasonable inferences that Harvester even suggested specific prices to be charged by Chisholm, let alone threatened to cancel Chisholm’s franchise for failure to comply.

Appellant presented no direct evidence to support its allegation that the Cameron Sales co-dealership was established and operated to force Chisholm to increase its sales volume or, alternatively, terminate its franchise. While we recognize the import of circumstantial evidence in antitrust litigation, Theatre Enterprises, Inc. v. Paramount Film Distributing Corp., 346 U.S. 537, 540-541, 74 S.Ct. 257, 98 L.Ed. 273 (1954); Interstate Circuit, Inc. v. United States, 306 U.S. 208, 221-227, 59 S.Ct. 467, 83 L.Ed. 610 (1939), once again reference and comparison to the much-cited resale price maintenance cases demonstrates the weakness of appellant’s assertions. For example, in FTC v. Beech-Nut Packing Co., 257 U.S. 441, 42 S.Ct. 150, 66 L.Ed. 307 (1922), the manufacturer enforced its price maintenance scheme by refusing to deal not only with jobbers, retailers, and wholesalers who failed to abide by Beech-Nut’s suggested prices, but also with other distributors who sold to such noneomplying jobbers, retailers, and wholesalers. Resumption of business was possible only upon assurances that the distributor would maintain Beech-Nut’s suggested prices and refuse to deal with any distributors who did not. Moreover, “price-cutters” were reported to Beech-Nut by other distributors of its products, and other jobbers, retailers, and wholesalers were notified by Beech-Nut precisely which individuals were deviating from the company’s price schedules so that these individuals might be boycotted pursuant to the “Beech-Nut Policy.” 257 U.S. at 446-451.

We have nothing- of that sort in the case before us. Appellant makes much of the undisputed evidence that Harvester expressed interest in Cameron Sales’s large inventory of overaged new and used goods and items received in “barter” transactions. Cameron was told by Harvester representatives that he should move this inventory; indeed, he was told that the barter items should be disposed of “regardless of price.” Yet the

evidence does not support a reasonable inference that parent-Harvester’s interplay with its subsidiary Cameron Sales was designed to implement, as in BeechNut and its progeny, a pervasive scheme of resale price maintenance. It was simply giving business management and direction to a corporation in which it had a 75 percent stock ownership. There is no substantial evidence allowing a conclusion that Cameron Sales was operated to trigger lower prices by Chisholm.

We are also unable to agree with appellant that the concerted action between Harvester and Cameron Sales constituted an agreement to fix the resale prices to be charged by the latter. The crux of any price-fixing agreement is the relinquishment by a trader (here, Cameron) of the freedom to set prices in accordance with his own judgment. See Gray v. Shell Oil Co., 469 F.2d 742, 747-748 (9th Cir. 1972), cert. denied, 412 U.S. 943, 93 S.Ct. 2773, 37 L.Ed.2d 403 (1973); Plymouth Dealers’ Ass’n v. United States, 279 F.2d 128, 132 (9th Cir. 1960), quoting Kiefer-Stewart Co. v. Joseph E. Seagram & Sons, Inc., 340 U.S. 211, 213, 71 S.Ct. 259, 95 L.Ed. 219 (1951); Checker Motors Corp. v. Chrysler Corp., 283 F.Supp. 876, 882-883 (S.D.N.Y.1968), aff’d, 405 F.2d 319 (2d Cir.), cert. denied, 394 U.S. 999, 89 S.Ct. 1595, 22 L.Ed.2d 777 (1969). There was abundant testimony below that Cameron, as president of Cameron Sales, retained the authority to price the items to be sold by the corporation. Harvester’s suggestion — even “pressure”— that Cameron set prices for his inventory of new and used overaged goods that would facilitate the depletion of this inventory never amounted to a specification of what prices were to be charged by Cameron. To be sure, appellant elicited testimony demonstrating that Cameron was advised, or “pressured,” to move this inventory “regardless of price.” Nonetheless, the bulk of the testimony, and in particular that of Cameron himself, does not permit one reasonably to infer that these expressions by Harvester representatives impinged Cameron’s independent pricing discretion.

Our analysis may not be terminated, however, by concluding that the interplay between Harvester and Cameron Sales did not constitute vertical price fixing, which is per se unreasonable under Section 1 of the Sherman Act. We must also examine the evidence and inquire whether appellant presented a sufficient case for liability when the acts in question are scrutinized pursuant to a rule-of-reason test.

Under this approach, it is necessary to consider the purpose of the practices, the power of Harvester in the relevant product and geographic markets, and the effect of the practices upon competition within these markets. Times-Picayune Publishing Co. v. United States, 345 U.S. 594, 615, 73 S.Ct. 872, 97 L.Ed. 1277 (1953); see Chicago Board of Trade v. United States, 246 U.S. 231, 238, 38 S.Ct. 242, 62 L.Ed. 683 (1918) (Brandéis, J.). With the evidence presented below, we need look at only the first of these requirements: Harvester, as a parent corporation, was entitled to ensure that Cameron Sales’s inventory was sufficiently fluid so as to avoid excessive interest charges incurred by reason of retention of overaged products. Moreover, Harvester’s concern for the movement of overaged goods and Cameron’s barter inventory, both of which involved significant capital and were subject to loss attributable to depreciation, is supported by sound business judgment. We perceive no substantial evidence upon which to predicate an inference that Harvester acted in furtherance of anti-competitive objectives. See generally United States v. Columbia Steel Co., 334 U.S. 495, 522-523, 68 S.Ct. 1107, 92 L.Ed. 1533 (1948); Joseph E. Seagram & Sons, Inc. v. Hawaiian Oke & Liquors, Ltd., 416 F.2d 71, 76-80 (9th Cir. 1969), cert. denied, 396 U.S. 1062, 90 S.Ct. 752, 24 L.Ed.2d 755 (1970); Independent Iron Works, Inc. v. United States Steel Corp., 322 F.2d 656, 663, 665 (9th Cir.), cert. denied, 375 U.S. 922, 84 S.Ct. 267, 11 L.Ed.2d 165 (1963).

In support of its contention to the contrary, and also in support of its allegation that Harvester violated Section 2 of the Sherman Act by attempting and conspiring to monopolize, appellant points to a meeting of several Harvester dealers, held after Chisholm had terminated its franchise, at which a fixed price for a certain item was agreed upon. Appellant cites several cases for the proposition that such a subsequent event is relevant circumstantial evidence to establish the presence of anticompetitive conduct occurring within the prior period, i. e., the period before appellant sold its franchise. E. g., FTC v. Cement Institute, 333 U.S. 683, 703-706, 68 S.Ct. 793, 92 L.Ed. 1010 (1948). We do not dispute this rule of evidence. See Girardi v. Gates Rubber Co. Sales Division, Inc., 325 F.2d 196, 203 (9th Cir. 1963). When this evidence is viewed in conjunction with the totality of the testimony presented below, however, the probative value of this single meeting is significantly diminished. Any inference that Harvester intended to fix prices during the prior period is rebutted by evidence establishing legitimate business purposes for its actions during that period. In other words, evidence of this single price-fixing meeting, although favorable to appellant, did not contribute to substantial evidence sufficient to withstand a directed verdict in favor of appellee. Compare Girardi, supra.

There is no evidence to support appellant’s assertion that Smith Brothers conspired with Harvester to coerce Chisholm to lower its prices or, alternatively, retire from the market. Thurlow Smith, the active partner, testified that Harvester never forced him to accept merchandise he did not desire; if his dealership was overstocked, such was regarded by him only as a regular incident of this particular business enterprise. The evidence indicates that Harvester, rather than tolerating inadequate service facilities at Smith Brothers, sought to improve the dealership’s “parts” department. More importantly, however, the differential in overhead between Chisholm and Smith Brothers is assignable to the former’s stress upon service over sales for the derivation of profit and, further, to a difference in scope between the two businesses.

Violations of Section 2 of the Sherman Act

Appellant’s prima facie case to establish liability for attempt and conspiracy to monopolize required proof that Harvester possessed a specific intent to acquire unlawful monopoly power. Times-Picayune Publishing Co. v. United States, 345 U.S. 594, 626, 73 S.Ct. 872, 97 L.Ed. 1277 (1953); United States v. Griffith, 334 U.S. 100, 105, 68 S.Ct. 941, 92 L.Ed. 1236 (1948); Lessig v. Tidewater Oil Co., 327 F.2d 459, 474-475 (9th Cir.), cert. denied, 377 U.S. 993, 84 S.Ct. 1920, 12 L.Ed.2d 1046 (1964). We have only recently reaffirmed previous decisions of this court holding that this specific intent “must be accompanied by predatory conduct directed to accomplishing the unlawful purpose.” Hallmark Industry v. Reynolds Metal Co., 489 F.2d 8, 12 (9th Cir. 1973). Generally, it is from this predatory conduct that the requisite specific intent can be inferred. Id. We have examined carefully the evidence depicting Harvester’s operations in Cassia and Minidoka Counties during the critical time period at issue. We agree with the District Court that the evidence did not disclose that Harvester’s actions were not predominately motivated by legitimate business objectives. Accordingly, appellant’s case under Section 2 of the Sherman Act must fail. See Times-Picayune Publishing Co. v. United States, 345 U.S. 594, 626-627, 73 S.Ct. 872, 97 L.Ed. 1277 (1953); Independent Iron Works, Inc. v. United States Steel Corp., 322 F.2d 656, 667-668 (9th Cir.), cert. denied, 375 U.S. 922, 84 S.Ct. 267, 11 L.Ed.2d 165 (1963).

Harvester did not manage its subsidiary Cameron Sales without regard to retail profit. Indeed, the continued solvency of Cameron Sales underlay Harvester’s attempts to have the corporation reduce its inventory of overaged goods and items received through barter transactions. Prolonged maintenance of such an inventory would, according to the testimony adduced below, result in a substantial restriction of invested capital and would necessitate interest payments and other avoidable business expenses. The record shows that Cameron Sales operated profitably for the majority of the years in question. With these facts, appellant’s reliance upon Mt. Lebanon Motors, Inc. v. Chrysler Corp., 283 F.Supp. 453 (W.D.Pa.1968), aff’d on other grounds, 417 F.2d 622 (3d Cir. 1969), is misplaced. Cf. England v. Chrysler Corp., 493 F.2d 269, 273-275 (9th Cir. 1974).

In conclusion, we have reviewed appellant’s case with full regard for our duty to examine the evidence as a whole. Continental Ore Co. v. Union Carbide & Carbon Corp., 370 U.S. 690, 698-699, 82 S.Ct. 1404, 8 L.Ed.2d 777 (1962). The District Court correctly granted appellee’s motion for a directed verdict.

The judgment is affirmed.

      . The two franchises were approximately 8 miles apart.

      . Both were former employees of Harvester and one, Calvin Johnson, had been zone manager responsible for the territory containing the Harvester dealerships involved in this suit.

      . In its briefs filed in this appeal, appellant argues, albeit weakly, that appellee has also violated Section 2 of the Sherman Act by monopolization of the relevant product and geographic markets. This theory of liability was included neither within appellant’s amended complaint, O.T. at 3-10, nor within pretrial memoranda filed by appellant’s counsel. C.T. at 19-47, 474-89. We therefore decline to consider this theory of appellant’s action as properly before this court. E. g., Roberson v. United States, 382 F.2d 714, 718 (9th Cir. 1967); Fanchon & Marco, Inc. v. Paramount Pictures, Inc., 215 F.2d 167, 170 (9th Cir. 1954).

      . In issuing his ruling from the bench, the trial judge stated:
      “I am . . . aware of the tremendous difficulty of proving a case on the plaintiff’s side and of their right to have reasonable inferences and the case must hang on those ultimate inferences. But the trouble I am having in examining the evidence here is that I find the problem is that most of these inferences are based on an inference to the point mostly it is innuendo or speculation, and I just don’t believe that the plaintiff has been able to produce a case here based on the violation of antitrust laws that I can properly submit to the jury, and I don’t believe reasonable minds could believe that a factual situation has been presented to permit this matter to go to the jury.” R.T. at 1522-23.

      . The test is identical to that which is applied when examining the appropriateness of a judgment n. o. v. Cockrum v. Whitney, 479 F.2d 84, 85 (9th Cir. 1973); Standard Accident Ins. Co. v. Winget, 197 F.2d 97, 100 (9th Cir. 1952).

      . Since Section 1 of the Sherman Act requires proof of an agreement or combination before liability may attach, appellant’s prima facie case under this section must contain sufficient evidence of both attempted coercion and concerted action intended to force Chisholm’s compliance. Of course, had appellant acquiesced in Harvester’s pricing demands — which is not asserted here — the requisite plurality of conduct would be present. Albrecht v. Herald Co., 390 U.S. 145, 150 n. 6, 88 S.Ct. 869, 19 L.Ed.2d 998 (1968); United States v. Parke, Davis & Co., 362 U.S. 29, 46-47, 80 S.Ct. 503, 4 L.Ed.2d 505 (1960). Thus, even if one assumes that there is substantial evidence of an attempt by Harvester to induce Chisholm to lower its retail prices, there can be no liability under Section 1 of the Sherman Act unless there is also sufficient evidence that Harvester engaged either Cameron Sales or Smith Brothers to assist it to achieve this result. Parke, Davis & Co., supra, at 44; United States v. Colgate & Co., 250 U.S. 300, 307, 39 S.Ct. 465, 63 L.Ed. 992 (1919).

      . R.T. at 769, 798-99, 971.
      Donald Chisholm testified as follows :
      “Q. Yesterday you mentioned that International Harvester gives you a suggested list price ; do you recall that?
      “A. Yes, sir.
      “Q. And you also testified that you had to have some kind of suggested price; do you remember that?
      “A. Yes, sir.
      “Q. And that you found this suggestion of Harvester’s useful?
      “A. The industry does, yes.
      “Q. And Harvester never told you you had to charge that price, did they?
      “A. No.
      “Q. You were left to charge whatever price you felt like charging; isn’t that correct?
      “A. That is correct.
      “Q. But you decided of your own free will that you would try to charge the suggested price ; isn’t that correct?
      “A. That is right.” R.T. at 768-69.

      . Harvester did provide suggested retail prices for its products, but Chisholm alleges that it was pressured to sell at prices below those suggested. Chisholm was, in fact, selling “at or near” the listed prices.

      . The Beech-Nut scenario is fairly typical of the many cases in which liability for vertical price fixing lias been found. See, e. g., United States v. Parke, Davis & Co., 362 U.S. 29, 33, 80 S.Ct. 503, 4 L.Ed.2d 505 (1960) (compliance obtained by refusing to deal with maverick retailers and with wholesalers who dealt with such retailers). In Albrecht v. Herald Co., 390 U.S. 145, 88 S.Ct. 869, 19 L.Ed.2d 998 (1968), the carrier who raised his price beyond the level suggested by the newspaper was confronted by a combination of the newspaper and two additional parties who — with knowledge that the activities were designed to force compliance by Albrecht — joined with the newspaper in directly competing for Albrecht’s customers. 390 U.S. at 147-150. In our decision in Girardi v. Gates Rubber Co. Sales Division, Inc., 325 F.2d 196 (9th Cir. 1963), the concerted action intended to force compliance was jobbers’ complaints to the manufacturer in which they reported variation by another from the manufacturer’s suggested retail prices. 325 F.2d at 200-204.

      . It is clear that the interaction between Harvester and Cameron Sales satisfied the “agreement” requirement of section 1. See, e. g., Kiefer Stewart. Co. v. Joseph E. Seagram & Sons, Inc., 340 U.S. 211, 215, 71 S.Ct. 259, 95 L.Ed 219 (1951). The issue thus becomes whether or not this agreement resulted in an unreasonable restraint of trade.

      . R.T. at 448-50, 502-03, 1042, 1080, 1097-OS, 1114, 1439-42. As appellant argues, the board of directors of Cameron Sales, consisting of Cameron and several Harvester employees, possessed the authority to remove the corporation’s president should the business be conducted unprofitably. This is not the equivalent, however, of an ability to dictate to the president the specific prices to be charged by the dealership.

      . When questioned about the statement of Harvester’s representative that his overaged goods and barter should be moved “regardless of price,” Cameron responded :
      “That’s what he says, but after all, he didn’t have any money invested in this business and I did. I suspect that I am going to be a little bit careful how I am going to treat those prices.” R.T. at 448.

      . The term “rule of reason” was introduced by Chief Justice White in Standard Oil Co. v. United States, 221 U.S. 1, 62, 31 S.Ct. 502, 55 L.Ed. 619 (1911). Since that time, the rule has been employed to determine whether agreements among entrepreneurs violate Section 1 of the Sherman Act as combinations “in restraint of trade.” E. g., United States v. Topco Associates, Inc., 405 U.S. 596, 606-607, 92 S.Ct. 1126, 31 L.Ed.2d 515 (1972). See A. D. Neale, The Antitrust Laws of the U.S.A. 20-27 (2d ed. 1970) ; 1 J. von Kalinowski, Antitrust Laws and Trade Regulation § 6.02 [1] (1971). The rule is not applied to those agreements, such as agreements to fix prices, that, because of their inherent “pernicious” effect upon competition, are regarded as unreasonable per se. Topeo, supra at 607; Northern Pacific R. Co. v. United States, 356 U.S. 1, 5, 78 S.Ct. 514, 2 L.Ed.2d 545 (1958).

      . Harvester allows its dealers to hold new equipment for sale without payment or interest for 9 or 12 months depending upon the type of equipment involved. At the expiration of this period, interest at the market rate on the equipment still on hand must be paid. R.T. at 1168-69.

      . In addition to the prevention of interest and depreciation expenses and the desire to release needed capital, the movement of inventory was designed to permit Cameron Sales to qualify for Harvester’s volume discount.

      . Similarly, the statement by Cameron, after Chisholm had terminated its relation with Harvester, that he hoped Chisholm’s replacement would engage in interbrand, rather than intrabrand, competition, although relevant, lacks sufficient probative value to allow an imputation of anticompetitive intent to Harvester during the prior period.

      . R.T. at 564-72.

      . For example, Smith Brothers, unlike Chisholm, carried only • International’s farm equipment, not its trucks. It operates out of a service station. John Chisholm testified that his dealership relied upon its parts and service department, and Harvester’s volume discount, to recoup losses incurred on sales of Harvester’s trucks. See R..T. at 873, 924.

      . See notes 14-15 supra.

      . Net profit was demonstrated for fiscal year 1964 and fiscal years 1966-1970. R.T. at 509-11. Cameron purchased Harvester’s interest in Cameron Sales in 1971 and, thereby, terminated the co-dealership arrangement.

      . In Mt. Lebanon Motors, supra, plaintiff, a former independent Chrysler automobile dealer, sued Chrysler Corp. and alleged that Chrysler was using its wholly owned and substantially owned dealerships in an attempt to obtain monopoly power. The court summarized plaintiff’s evidence, which was held sufficient to withstand a motion for a directed verdict, as follows :
      “Plaintiff offered evidence tending to show that the Chrysler-financed dealerships, commonly called ‘factory stores’, engaged in price-cutting and massive advertising, to the detriment of privately-financed dealerships in the Pittsburgh area, which were not able to afford advertising on such a large scale or to accept profits as small as those obtained by the factory stores in their deals with customers.
      “Plaintiff’s proof tended to show that the factory stores consistently lost money and were unprofitable; but that from time to time, when circumstances required, Chrysler would make gifts or additional investments in the form of ‘capital contributions’ to the factory-financed dealerships, thus enabling them to continue in business, notwithstanding their losses resulting from their normal operations.
      “There was also evidence that the ‘dealer enterprise’ division of Chrysler would from time to time furnish temporary employees to the factory stores when they experienced a shortage of adequate personnel and would furnish assistance to the factory stores in establishing their accounting systems and would also furnish substantial advertising allowances in launching the new dealerships.” 283 F.Supp. at 457.