Page:Calnetics Corp. v. Volkswagen of America, Inc. (532 F.2d 674).pdf/17

 The summary judgments in favor of VW and Subsidiary on the Sherman Act claims are vacated.

In its complaint, Calnetics demanded a jury trial. VW, Subsidiary, and Distributor were entitled to rely on this demand, and were not obliged to make an independent demand with respect to the issues covered by Calnetics’ demand in order to preserve their right to trial by jury under Fed.R.Civ.P. 38. See 5 J. Moore, Federal Practice ¶ 38.39[1], at 312; ¶ 38.45 (2d ed. 1948, as amended 1975).

Trial by jury of Calnetics’ § 7 claim commenced on April 4, 1972, but was interrupted by a directed verdict on the issue of damages at the close of Calnetics’ case. After granting the directed verdict the court dismissed the jury, over objections by VW and Subsidiary. The court then heard evidence on the remaining equitable claims, held that the acquisition of Subsidiary violated § 7 of the Clayton Act, and ordered divestiture.

Calnetics does not directly argue with VW’s and Subsidiary’s contention that, if the directed verdict and other summary dispositions in favor of VW and Subsidiary were erroneous, the defendants are entitled to a jury trial on remand of the entire § 7 claim, but a new trial makes it necessary to decide this point.

The Supreme Court held in Ross v. Bernhard, 396 U.S. 581, 90 S.Ct. 733, 24 L.Ed.2d 729 (1970), that “where equitable and legal claims are joined in the same action, there is a right to jury trial on the legal claims which must not be infringed either by trying the legal issues as incidental to the equitable ones or by a court trial of a common issue existing between the claims * * *.” 396 U.S. at 537–38, 90 S.Ct. at 738, 24 L.Ed.2d at 736. Prior nonjury trial of the equitable claims may infringe the right to jury trial on the legal claims because of the collateral estoppel or res judicata effect of a prior judicial determination of issues common to the two sets of claims. Heyman v. Kline, 456 F.2d 123, 130 (2d Cir.), ''cert. denied'', 409 U.S. 847, 93 S.Ct. 53, 34 L.Ed.2d 88 (1972).

VW and Subsidiary are entitled to a jury determination of the Clayton Act claim for damages; this right may not be infringed by a prior judicial determination of the equitable claim. If the district court’s determination that the acquisition violated § 7, made in the context of a nonjury trial of the equitable claims, were allowed to stand it would bind VW and Subsidiary in subsequent proceedings. Because the damages claim under § 7 remains outstanding as the result of our reversal of the § 7 directed verdict, the prior determination of a § 7 violation would infringe VW’s and Subsidiary’s right to a jury trial of the damages claim. Accordingly, the district court’s judgment holding that the acquisition violated § 7 must be vacated. The entire § 7 claim must be remanded for a jury trial. If, on remand, the jury determines that the acquisition did not violate § 7, that determination will preclude equitable relief. If the jury determines that the acquisition did violate § 7, the trial judge must then go on to decide whether Calnetics is entitled to equitable relief under the standards of § 16 of the Clayton Act, 15 U.S.C. § 26.