Nos. 02-1297/1418 2660 WOODLEY ROAD JOINT VENTURE v. Itt Sheraton Corporation

PRECEDENTIAL
IN THE UNITED STATES COURT OF
APPEALS
FOR THE THIRD CIRCUIT
Nos. 02-1297/1418
2660 WOODLEY ROAD JOINT
VENTURE;
WOODLEY ROAD ASSOCIATES,
INC.;
JOHN HANCOCK MUTUAL LIFE
INSURANCE COMPANY;
*SUM ITOMO LIFE REALTY (N.Y.)
INC.
v.
ITT SHERATON CORPORATION;
SHERATON OPERATING
CORPORATION;
WASHINGTON SHERATON
CORPORATION**
ITT Sheraton Corporation,
Sheraton Operating Corporation and
Washington Sheraton Corporation,**
Appellant No. 02-1297
(*Dismissed per the Clerk Order of
5/23/02)
(**Dismissed per the Court Order of
9/25/02)
2660 WOODLEY ROAD JOINT
VENTURE;
WOODLEY ROAD ASSOCIATES,
INC.;
JOHN HANCOCK MUTUAL LIFE
INSURANCE COMPANY;
*SUM ITOMO LIFE REALTY (N.Y.)
INC.
Appellants No. 02-1418
v.
ITT SHERATON CORPORATION;
SHERATON OPERATING
CORPORATION;
WASHINGTON SHERATON
CORPORATION**
(*Dismissed per the Clerk Order of
5/23/02)
(**Dismissed per the Court Order of
9/25/02)
On Appeal From the United States
District Court
For the District of Delaware
(D.C. Civ. No. 97-cv-00450)
Chief District Judge: Hon. Joseph J.
Farnan, Jr.
ARGUED: FEBRUARY 13, 2003
BEFORE:ALITO and McKEE,
Circuit Judges, and SCHWARZER,*
Senior District Judge
*Honorable William W. Schwarzer,
Senior United States District Judge,
Northern District of California, sitting by
designation.

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2
(Filed: May 25, 2004)
ANDREW L. FREY (ARGUED)
Mayer, Brown, Rowe & Maw
1675 Broadway
New York, NY 10019
EVEN M. TAGER
ROBERT L. BRONSTON
Mayer, Brown, Rowe & Maw
1909 K Street, N.W.
Washington, D.C. 20006
Attorneys for Appellants/Cross-Appellees
ITT Sheraton Corporation and Sheraton
Operating Corporation
THOMAS A. ARENA (ARGUED)
WILLIAM E. WALLACE, III
TIMOTHY P. WEI
Milbank, Tweed, Hadley & McCloy LLP
One Chase Manhattan Plaza
New York, NY 10005
Attorneys for Appellees/Cross-Appellants
2660 Woodley Road Joint Venture;
John Hancock Mutual Life Insurance
Company;
and Sumitomo Life Realty (N.Y.) Inc.
OPINION OF THE COURT
McKEE, Circuit Judge.
We are asked to review the
propriety of damage awards, including an
award for punitive damages, in an action
for commercial bribery under § 2(c) of the
Robinson-Patman Act, racketeering under
the Racketeer Influenc ed Co rrupt
Organization Act (“RICO”), breach of
contract and related state law claims. We
hold that the plaintiff can not maintain an
action under § 2(c) of the Robinson-
Patmam Act because it has not established
antitrust standing. We also hold that the
record does not support portions of other
damage awards, including the award for
punitive damages, as explained more fully
below. Accordingly, we will affirm in part
and reverse in part, and remand for further
proceedings consistent with this opinion.
I. FACTUAL AND PROCEDURAL
BACKGROUND
John Hancock Life Insurance
Company, 2660 Woodley Road Joint
Venture and Woodley Road Associates,
Inc. (collectively referred to as “Hancock”)
together owned the Sheraton Washington
Hotel (the “Hotel”). In September 1979,
Hancock entered into a Management
Agreement under which Sheraton agreed
to act as Hancock’s agent in managing the
Hotel’s operations. In return, Sheraton
received a percentage of the Hotel’s gross
revenue and a share of its net cash flow.
The suit arises from an arrangement
known as the “Sheraton Purchasing
Resource” program (the “SPR”) that was
initiated pursuant to the terms of the
Management Agreement. Pursuant to the
terms of the SPR program, Sheraton

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3
negotiated large-volume discounts with
vendors seeking to supply Sheraton-
managed hotels. Sheraton then required
the vendors to add a surcharge to the price
billed to the individual hotels for each
purchase. However, the surcharge was not
itemized, or even disclosed, on any bills or
invoices that vendors sent to individual
hotels. Rather, the surcharge was remitted
directly to Sheraton in the form of a
“rebate.” The Management Agreement
provided that Sheraton was entitled to be
reimbursed for the costs of providing these
services. Sheraton claimed that these
rebates reimbursed it for the centralized
purchasing services it provided under the
SPR program as well as associated
overhead costs.
The Management Agreement
between Sheraton and Hancock remained
in effect until 1993, when differences
between the parties led to its termination.
Thereafter, Hancock filed this lawsuit. In
its complaint, Hancock alleged: violations
of § 2(c) of the Robinson-Patman Act, 15
U.S.C. § 13(c); violations of RICO, 18
U.S.C. § 1961; and state law claims of
breach of contract, breach of fiduciary
duty, and breach of the implied duty of
good faith and fair dealing; as well as
fraud, and intentional or negligent
misrepresentation. Hancock also claimed
that Sheraton failed to properly act as its
agent in operating its reservation system,
failing to limit usable denials,1 improperly
profiting from providing Workers’
Compensation insurance, permitting
excessive numbers of complimentary
rooms, and breaching other unspecified
contractual duties.
Hancock’s suit proceeded to trial
where a jury found for Sheraton on
Hancock’s RICO claim, but found for
Hancock on its Robinson-Patman Act
claim. The jury also found for Hancock on
several of its state law claims, including
claims that Sheraton had breached the
Management Agreement with regard to
purchasing services, and providing
Workers Compensation insurance. The
jury further found in favor in Hancock on
its breach of fiduciary duty claim. The
jury concluded that Sheraton breached an
implied duty of good faith and fair dealing,
and that Sheraton was liable for its
misrepresentations to Hancock. The jury
awarded damages of $750,000 on the
Robinson-Patman Act claim (subsequently
trebled by the court), a total of
$10,732,000 on the breach of contract
claims, $1,100,000 on the tort claims, and
$37,500,000 in punitive damages. The
district court denied Sheraton’s motion for
judgment as a matter of law but granted a
remittitur thereby reducing the punitive
damages to $17,415,000. The district
court then entered judgment in favor of
Hancock in the total amount of
$31,497,000, but denied Hancock’s motion
for attorneys’ fees and taxation of costs
without prejudice. Sheraton appealed
1According to Sheraton, a usable denial
occurs when a potential guest is denied a
reservation when a room is actually
a v a i la b l e . S h e r a t o n ’ s B r . a s
appellant/cross-appellee, at 13.

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4
from the judgment, and Hancock cross-
appealed from the remittitur.2 For the
reasons that follow, we will affirm in part
and reverse in part.
II. DISCUSSION
A. ROBINSON-PATMAN ACT
CLAIM
Hancock’s Antitrust Standing
Sheraton renews its argument that
Hancock lacks antitrust standing to bring a
claim under § 2(c) of the Robinson-
Patman Act.3 We must address that issue
before addressing the merits of the appeal
or cross-appeal.
Section 2(c) of the Robinson-
Patman Act provides:
It shall be unlawful for any
p e r s o n e n g a g e d i n
commerce, in the course of
such commerce, to pay or
grant, or to receive or
accept, anything of value as
a commission, brokerage, or
other compensation, or any
allowance or discount in
lieu thereof, except for
s e r v ic e s r e n d e r e d in
connection with the sale or
purchase of goods, wares, or
merchandise, either to the
o t h e r p a r t y t o s u c h
transaction or to an agent,
representative, or other
intermediary therein where
such intermediary is acting
in fact for or in behalf, or is
subject to the direct or
indirect control, of any party
to such transaction other
than the person by whom
such compensation is so
granted or paid.
15 U.S.C. § 13(c). “Congress enacted
section 2(c), the Act’s brokerage
provision, primarily to curb one particular
abuse by large chain store buyers, namely
the use of ‘dummy’ brokerage fees as a
means of securing price rebates.”
Environmental Tectoni cs v . W.S .
Kirkpatrick, Inc., 847 F.2d 1052, 1066 (3d
Cir. 1988) (citation omitted). This concern
arose from large stores using their
economic dominance to force sellers to
pay a fee for doing business. “The large
stores required the sellers to pay a
‘brokerage’ to persons employed by the
buyers. These persons had rendered no
service, and would simply pay over the
commissions to their em ploye rs.”
Seaboard Supply Co. v. Congoleum Corp.,
770 F.2d 367, 371 (3d Cir. 1985).
However, Hancock’s § 2(c) claim is
not a dummy brokerage claim. Rather,
Hancock has fashioned its § 2(c) action as
2 We have jurisdiction under 28 U.S.C.
§ 1291.
3The Robinson-Patman Act of 1936
was enacted as an amendment to the
Clayton Act. Great Atlantic & Pacific Tea
Co. v. Federal Trade Commission, 106
F.2d 667, 669 (3d Cir. 1939).

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5
a comm ercial bribery claim.4 Surprisingly, the Supreme Court has never
decided a § 2(c) commercial bribery case.
However, in dicta in Federal Trade
Commission v. Henry Broch, Inc., 363
U.S. 166 (1960), the Court noted that §
2(c) does encompass commercial bribery.
Id. at 169 n.6 (“And although not
mentioned in the Committee Reports, the
debates on the bill show clearly that § 2(c)
was intended to proscribe other practices
such as the ‘bribing’ of a seller’s broker by
the buyer.”) (citation omitted).5 Similarly,
4Sheraton insists that the SPR program
was not commercial bribery because the
rebates simply served to compensate it for
the costs it incurred in operating the
program. Nevertheless, it accepts
Hancock’s characterization of the SPR
program as commercial bribery for
purposes of this appeal.
As a general principle, a critical
element of commercial bribery is the
breach of the duty of fidelity. For
example, the Model Penal Code provides:
Commercial Bribery and
Breach of Duty to Act
Disinterestedly.
(1) A person commits a
misdemeanor if he solicits,
accepts or agrees to accept any
benefit as consideration for
knowingly violating or
agreeing to violate a duty of
fidelity to which he is subject
as:
(a) partner, agent, or employee
of another;
(b) trustee, guardian, or other
fiduciary;
(c) lawyer, physician,
accountant, appraiser, or other
professional adviser or
informant;
(d) officer, director, manager
or other participant in the
direction of the affairs of an
incorporated or unincorporated
association; or
(e) arbitrator or other
purportedly disinterested
adjudicator or referee.
(2) A person who holds
himself out to the public as
being engaged in the business
of making disinterested
selection, appraisal, or
criticism of commodities or
s e r v i c e s c o m m i t s a
misdemeanor if he solicits,
accepts or agrees to accept any
benefit to influence his
selection, appraisal or
criticism.
(3) A person commits a
misdemeanor if he confers, or
offers or agrees to confer, any
benefit the acceptance of
which would be criminal
under this Section.
MODEL PENAL CODE § 224.8. See United
States v Dischner, 960 F.2d 879 (9th Cir.
1992).
5In Broch a manufacturer sold apple
concentrate at a price of $1.30 a gallon.

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6
in dicta in California Motor Transport
Co. v. Trucking Unlimited, 404 U.S. 508,
513 (1972), the Court again noted that
“bribery of a public purchasing agent may
constitute a violation of § 2(c) of the
Clayton Act, as amended by the Robinson-
Patman Act.” In addition, a number of
courts of appeals have held that § 2(c)
encompasses commercial br iber y.6
Although we once expressed skepticism
about “whether Congress intended to
sweep commercial bribery within the
ambit of § 2(c),” Seaboard Supply, 770
F.2d at 371, we have since agreed that
“commercial bribery is actionable under
2(c).” Environmental Tectonics, 847 F.2d
at 1066.
Nevertheless, although § 2(c) of the
Robinson-Patman Act defines certain
conduct as illegal, it does not create a
private right of action to sue for damages
resulting from violations of the Act.
Rather, the private right of action for a §
2(c) Robinson-Patman Act claim, as for all
private plaintiff antitrust rights of action, is
provided by § 4 of the Clayton Act.
Genesco, Inc. v. T. Kakuichi & Co., 815
F.2d 840, 853 (2d Cir. 1987). Section 4 of
the Clayton Act provides:
Any person who shall be
injured in his business or
property by reason of
anything forbidden in the
antitrust laws may sue
therefor in any district court
of the United States in the
district in which th e
defendant resides or is
found or has an agent,
without respect to the
amount in controversy, and
shall recover threefold the
damages by him sustained,
and the cost of suit,
The manufacturer sold through a broker
and paid the broker a commission of 5%.
One buyer would not pay more than $1.25
for the concentrate and the manufacturer
refused to lower his price unless the broker
agreed to take a cut in his commission
from 5% to 3%. The broker agreed and
the sale was consummated at $1.25 with a
lower commission. The Court viewed this
transaction as identical to one in which the
broker received a commission of 5%, the
normal commission, and then turned over
a part of the commission, i.e., 2%, to the
buyer. That would have been illegal under
§ 2(c) as a payment in lieu of brokerage
and, therefore, the Court found that the
reduction in commission in Broch was also
a payment in lieu of brokerage.
6See, e.g., Harris v. Duty Free Shoppers
Ltd. Partnership, 940 F.2d 1272 (9th Cir.
1991); Stephen Jay Photography, Ltd. v.
Olan Mills, 903 F.2d 988 (4th Cir. 1990);
Larry R. George Sales Co. v. Cool Attic
Corp., 587 F.2d 266 (5th Cir. 1979);
Grace v. E.J. Kozin, 538 F.2d 170 (7th Cir.
1976); Calnetic Corp. v. Volkswagen of
America, Inc., 532 F.2d 674 (9th Cir.
1976); Rangen, Inc. v. Sterling Nelson &
Sons, 351 F.2d 851 (9th Cir. 1965); Fitch
v. Kentucky-Tennessee Light & Power Co.,
136 F.2d 12 (6th Cir. 1943).

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7
including a reasonable
attorney’s fee.
15 U.S.C. § 15(a). However, in order to
recover treble damages under § 4(a) of the
Clayton Act, a private plaintiff must do
more than simply show “an injury causally
linked to” a violation of the antitrust laws.
Brunswick Corp. v. Pueblo Bowl-O-Mat,
Inc., 429 U.S. 477, 489 (1977). A plaintiff
must also prove “antitrust injury, which is
to say injury of the type the antitrust laws
were intended to prevent and that flows
from that which makes defendants’ acts
unlawful.” Id. Thus, the Court pronounced
in J. Truett Payne Co. v. Chrysler Motors
Corp., 451 U.S. 557, 568 (1981), “even if
there has been a violation of the Robinson-
Patman Act, [a plaintiff] is not excused
from its burden of proving antitrust injury
and damages.”
As noted above, the Supreme Court
has not yet defined “antitrust injury,” for
purposes of a § 2(c) Robinson-Patman
claim. However, Hancock argues that it
suffered antitrust injury as a result of
Sheraton’s commercial bribery scheme,
i.e., the SPR program. Hancock refers to
this program as a “kickback” and claims
that Sheraton inflated Hancock’s
purchasing costs by adding SPR
surcharges and then collecting the
increased costs in the form of the rebates it
collected from Hancock’s vendors.
According to Hancock, it suffered antitrust
injury because it could only purchase
goods from vendors participating in
Sheraton’s SPR program, and it had to pay
these artificially inflated prices for goods
purchased through that program. Hancock
also argues that the increased cost put it at
a competitive disadvantage with regard to
hotels owned by Sheraton.
However, we do not think that
paying inflated purchasing prices to
vendors, without more, is “an injury of the
type the antitrust laws were intended to
prevent . . . that flows from that which
makes the defendants’ acts unlawful.”
Brunswick, 429 U.S. at 489. Rather,
Hancock’s injury was caused by a breach
of contract and the corruption of the
principal-agent relationship. We agree
that, in an appropriate case, a breach of
contract or a breach of fiduciary duty
could result in the kind of injury “the
antitrust laws were intended to prevent.”
However, we do not believe that Hancock
has established such an injury here. The
absence of such injury is fatal to
Hancock’s attempt to establish antitrust
standing.7
7 As noted above, Sheraton manages the
Hotel under contract with Hancock.
However, Sheraton also manages hotels
that it actually owns. Hancock also alleges
that the rebate scheme put it at a
competitive disadvantage to Sheraton-
owned hotels because. According to
Hancock, “the rebate scheme impacted the
Hotel differently than it did Sheraton-
owned hotels: The rebate program
increased the costs of the goods and
services [Hancock] purchased on behalf
of the Hotel, whereas the rebate scheme
did not impose a real cost on Sheraton-
owned hotels, which simply ‘paid’ the
kickback to their corporate parent.”

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8
“Antitrust standing and its
terminological cousin, antitrust injury, are
often confused.” Triple M Roofing Corp.
v. Tremco, Inc., 753 F.2d 242, 247 (2d Cir.
1985). “Lack of standing and antitrust
injury ofte n have been invoked
interchangeably against a plaintiff even
though each concept involves a distinct
element of the § 4 action.” Greater
Rockford Energy and Technology Co. v.
Shell Oil Co., 998 F.2d 391, 395 (7th Cir.
1993). Part of this confusion may result
from the ease with which antitrust injury
and competitive injury can be conflated
into a single inquiry.8
It is now settled that a § 2(c)
plaintiff does not have to prove
competitive injury to establish a § 2(c)
violation. In Federal Trade Commission
v. Simplicity Pattern Co., 360 U.S. 55, 65
(1959), the Supreme Court noted, inter
alia, that § 2(c) of the Robinson-Patman
Act makes the business practices described
therein unlawful. Therefore, “the
proscriptions [of § 2(c)] are absolute. .
.[and § 2(c) does not] require[], as proof of
a prima facie violation, a showing that the
illicit practice has had an injurious or
destructive effect on competition.” Id.
Accordingly, “the presence of an anti-
competitive effect is not necessary to
prove a violation of section 2(c).”
Seaboard Supply Co. v. Congoleum Corp.,
770 F.2d 367, 371 n.3 (3d Cir. 1985). The
anti-competitive effect is the presumed
result of the illegal conduct.
However, the successful plaintiff
must still prove more than a § 2(c)
violation and the accompanying anti-
competitive effect to prevail. The plaintiff
must also establish the requisite antitrust
injury, and this requires more than
establishing the anti-competitive effect
that is endemic in the violation. In other
words, the mere fact that certain conduct
Hancock’s Br. at 23.
However, Sheraton argues that
Hancock produced no evidence that
Hancock was put at a competitive
disadvantage vis-a-vis Sheraton-owned
hotels because the evidence established
that there are no Sheraton-owned hotels in
the Washington, D.C. area where the Hotel
does business. Sheraton’s Br. at 26.
Absent any such competition, Sheraton
argues, Hancock could not have been put
at a competitive disadvantage by the
surcharge and therefore could not have
sustained a competitive injury because of
it.
8The difficulty in distinguishing these
two interrelated concepts was summed up
by the district court in Wilson v. Ringsby
Truck Lines, Inc., 320 F.Supp. 699, 700
(D. Colo. 1970). There the court candidly
noted, “[w]e must confess at the outset
that we find antitrust standing cases more
than a little confusing and certainly beyond
our powers of reconciliation.” A
commentator subsequently noted that the
“court could hardly have been faulted, for
the confusion it noted has been endemic to
these cases since the creation of the treble-
damages action.” Daniel Richman, Note,
Antitrust Standing, Antitrust Injury, and
the Per Se Standard, 93 Yale L. J. 1309
(1984).

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9
has an anticompetitive effect does not
mean that a given plaintiff has suffered an
antitrust injury, or that a given plaintiff is
the appropriate party to seek recovery
under the antitrust laws. Accordingly,
“[e]ven a plaintiff who can show antitrust
injury may lack antitrust standing. . . .”
Barton & Pittinos, Inc., v. Smith Kline
Beechum Corp., 118 F.3d 178, 182 (3rd
Cir. 1997). The Supreme Court explained
this in Associated General Contractors of
California, Inc. v. California State Council
of Carpenters, 459 U.S. 519 (1983).
There, the Court said:
[a] literal reading of [§ 4 of
the Clayton Act] is broad
enough to encompass every
harm that can be attributed
directly or indirectly to the
consequences of an antitrust
violation. Some of our prior
cases have paraphrased the
statute in an e quall y
expansive way. But before
we hold that the statute is as
broad as its words suggest,
we must consider whether
Congress intended such an
open-ended meaning.
Id. at 529-30 (footnote omitted).
Associated General Contractors involved
a number of carpenters’ unions that
alleged that A ssocia ted Ge nera l
Contractors, a trade association made up of
general contractors, had coerced customers
and competing contractors to give some of
their business to non-union contractors.9
Plaintiffs alleged that the coercion resulted
in less business for firms employing union
carpenters. The Court held that because
the carpenters’ unions were “neither a
consumer nor a competitor in the market in
which trade was constrained,” their
injuries were not the type of injury that the
antitrust laws were designed to prevent.
Id. at 539. The carpenters’ unions may
well have had a cause of action under
other statutes or common law, and a
different plaintiff may have had a cause of
action under the antitrust statues.
However, the carpenters’ unions had no
standing to sue under those laws. The
Court reached this conclusion even though
the Association’s conduct had an
anticompetitive effect. M oreover, firms
hiring union carpenters had clearly
suffered an anticompetitive injury because
the Association’s coercion made it more
difficult for those firms to win contracts.
Yet, notwithstanding the anticompetitive
effect of the conduct in question, the Court
concluded that the plaintiff carpenters’
unions had not suffered a sufficient
antitrust injury.
In arriving at that decision, the
Court read the antitrust statues in light of
their common law background and read a
“proximate cause element into § 4
[Clayton Act] actions.” Greater Rockford
Energy, 998 F.2d at 394. As a result of
Associated General Contractors, § 4 of the
Clayton Act has been given a narrowed
9 The Association’s customers included
landowners who needed construction
services.

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10
reading. We have
synthesized the Court’s
analysis into the following
formulation of the factors
that are relevant in an
antitrust standing challenge:
(1) the causal connection
be t w e e n the antitru st
violation and the harm to the
plaintiff and the intent by
the defendant to cause that
harm, with neither factor
alone conferring standing;
(2) whether the plaintiff’s
alleged injury is of the type
for which the antitrust laws
were intended to provide
redress; (3) the directness of
the injury, which addressed
the concerns that liberal
application of standing
principles might produce
speculative claims; (4) the
existence of more direct
victims of the alleged
antitrust violations; and (5)
the potential for duplicative
r e c o v e r y o r c o m p l e x
apportionment of damages.
Barton & Pittinos, 118 F.3d at 181 (citing
In re Lower Lake Erie Iron Ore Antitrust
Litig., 998 F.2d 1144, 1165-66 (3d Cir.
1993)). The traditional concept of antitrust
injury continues to be an important part of
antitrust standing under this formulation. It
is subsumed within the second factor of
the 5 prong inquiry (i.e. “whether the
plaintiff’s alleged injury is . . . the type . .
. the antitrust laws were intended to
[remedy]”). City of Pittsburgh v. West
Penn Power Comp., 147 F.3d 256, 264 (3d
Cir. 1998). “The antitrust standing inquiry
is not a black-letter rule, but rather, [it] is
essentially a balancing test comprised of
many constant and variable factors.” Id., at
264-5 (internal quotation marks omitted).
Antitrust injury thus becomes but
one element of the inquiry into antitrust
standing. It is “a necessary but insufficient
condition of antitrust standing.” Barton &
Pittinos, 118 F.3d at 182 (citing Lower
Lake Erie Iron Ore Antitrust Litig., 998
F.2d at 1166). Therefore, as noted above,
“[e]ven a plaintiff who can show antitrust
injury may lack antitrust standing, because
the remaining [Associated General
Contractors] factors may weigh against
allowing him or her to sue under the
antitrust laws.”10 Id. (citing Cargill, Inc. v.
Monfort of Colorado, Inc., 479 U.S. 104,
110 n.5 (1986)).
10The antitrust injury requirement of the
antitrust standing inquiry is analogous to
the minimum standing requirement of a
case or controversy within the meaning of
Article III, § 2 of the Constitution, while
the other Associated General Contractors
factors are analogous to the prudential
limitations on standing. Barton & Pittinos,
118 F.3d at 182 n.4; City of Pittsburgh,
147 F.3d at 264. [See Trump Hotels &
Casino Resorts, Inc. v. Mirage Resorts
Incorp., 140 F.3d 478, 484-85 (3d Cir.
1998), for a discussion of Article III
standing and the prudential limitations on
standing.]

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11
“The Associated General test has
been regularly and consistently applied as
the passageway through which antitrust
plaintiffs must advance.” City of
Pittsburgh, 147 F.3d at 264. Accordingly,
even if we assume arguendo that Hancock
suffered an antitrust injury because it paid
inflated prices as a result of Sheraton’s
alleged commercial bribery, that would not
necessarily establish Hancock’s antitrust
standing. Hancock must still navigate
through the course defined by Associated
General. Yet, it can not successfully do
that on this record because it can not
circumnavigate the barrier posed by
Associated General factors (1), (3), (4) or
(5). With regard to factors (1)11 and (3),12
we think it is important to remember that
Sheraton contends that the surcharge and
rebate aspects of the SPR program was not
commercial bribery at all, but simply a
way for it to recoup the costs it incurred in
administering the program. Even if
Sheraton inflated the amount of those
charges beyond that which was necessary
to recoup its costs, the propriety of
Hancock maintaining an antitrust action is
still problematic for reasons we will
elaborate upon below.
Even if we assume Hancock is
correct as to factors (1) and (3), it surely
can not survive an inquiry under factor
(4)13 because there are clearly “more direct
victims” of Sheraton’s alleged commercial
bribery scheme. Vendors who may have
been prevented from selling goods to
Hancock because they refused to
participate in the SPR program of
surcharges and rebates are far more direct
victims of Sheraton’s scheme than
Hancock. Moreover, their injury is much
closer to the kind of injury antitrust laws
address because the displaced vendors
were unable to participate in the market
c r e a te d b y th e S P R p r o g r a m .
Significantly, Hancock comes close to
conceding as much in its complaint.
Hancock alleges:
[v]endors unwilling to pay
kickbacks to Defendants
were competitively harmed,
and by mandating the
Hotel’s participation in
national a n d regional
contracts negotiated by
[Sheraton], Defendants
denied [Han cock] the
o p p o rtunity to o b t a in
advantageous prices and
t e r m s f r o m n o n -
p a r t i c i p a t i n g v e n d o r s .
Favored vendors not only
drew sales or profits from
non-favored vendors, but
the attendant reduction in
competition and higher costs
resulted in direct antitrust
injury to [Hancock].
11 “The causal connection between the
antitrust violation and the harm to the
plaintiff and the intent by the defendant to
cause that harm[.]”
12 “The directness of the injury. . . .”
13 “The existence of more direct victims
of the alleged antitrust violations[.]”

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12
Complaint at ¶ 143.
Although Hancock does allege that
it suffered an anticompetitive injury by
being forced to pay higher prices as a
result of reduced competition, we think
Hancock is in an analogous situation to the
carpenters’ unions in Associated General
Contractors. There, customers suffered a
more direct and more appropriate antitrust
injury even though the alleged antitrust
violation had an effect on the carpenters’
union. There is an analogous situation
here if we compare the injury of the
excluded vendors to Hancock’s injury.
Unlike the Sherman Act, which
“protects competition, not competitors, . .
. the Robinson-Patman Act extends its
protection to competitors.” Monahan’s
Marine, Inc. v. Boston Whaler, Inc., 866
F.2d 525, 528 (1st Cir. 1989) (emphasis in
original). We think our discussion in
Environmental Tectonics is therefore also
quite helpful to this analysis. There, a
company bribed foreign officials in order
to receive a contract to supply aircraft
equipment to the foreign government’s air
force, and a competitor brought a § 2(c)
commercial bribery claim.14 The district
court dismissed the action in its entirety on
the basis of the act of state doctrine.15 We
reversed because we concluded that the act
of state doctrine did not apply.16 In doing
so, we noted the difficulty of precisely
defining standing under § 2(c). 847 F.2d
at 1066. We also noted that “it is generally
agreed that a direct competitor of a
company that obtains a contract through
commercial bribery has standing to press a
2(c) claim against the briber.” Id.
(citations omitted). Admittedly, we did not
limit the class of potential § 2(c)
commercial bribery plaintiffs to disfavored
competitors. However, we mentioned
disfavored competitors having § 2(c)
commercial bribery standing after stating:
“[I]n order to proceed with a claim, a
plaintiff must be able to demonstrate that
it is within the class of those injured in
their business or property, who, based on a
variety of factors, are best suited to further
the purposes of the statute by remedying
the violation alleged.” Id. at 1066 (citing
14 The suit involved several claims in
addition to the § 2(c) commercial bribery
claim. However, the other claims are not
relevant to the issues here.
15“The doctrine is the judiciary’s
institutional response to the foreign
relations tensions that can be generated
when a United States court appears to sit
in judgment on a foreign state’s regulation
of its internal affairs. Under the doctrine,
the courts of this country will refrain from
judging the validity of a foreign state’s
governmental acts in regard to matters
within that country’s borders. The party
moving for the doctrine’s application has
the burden of proving that dismissal is an
appropriate response to the circumstances
presented in the case.” Environmental
Tectonics, 847 F.2d at 1057-58 (citations
omitted).
16As noted, we also held that
commercial bribery is actionable under §
2(c). 847 F.2d at 1066.

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13
Alberta Gas Chemicals, Ltd. v. E. I.
DuPont De Nemours and Co., 826 F.2d
1235, 1240 (3d Cir. 1987)). Significantly,
the portion of the Alberta Gas Chemicals
opinion we cited discusses both Brunswick
and Associated General.
Moreover, even if we focus on
Hancock’s allegation that it had to pay
inflated prices because it was forced to
purchase only from “favored vendors,” and
ignore Hancock’s admission that
“[v]endors unwilling to pay kickbacks . . .
were competitively harmed[,]” we would
still conclude that Hancock can not
establish antitrust standing under the fifth
factor in the Barton & Pittings analysis.
That requires us to consider whether an
award of antitrust damages would be
duplicative, and Hancock’s antitrust
recovery is inextricably intertwined with
its awards on the breach of contract and
breach of fiduciary duty claims.
As noted above, Hancock asserted
a number of state law claims arising from
the SPR program. The jury found that
Hancock suffered $250,000 in damages
related to the purchasing services program
and it also awarded $1,100,00 for
Sheraton’s breach of fiduciary duty. The
actions supporting those awards constitute
breach of contract and breach of fiduciary
duty. Allowing a separate recovery under
§ 2(c) creates insurmountable problems in
apportioning damages along with the real
possibility of cumulative damages.17
Accordingly, we hold that Hancock
does not have antitrust standing to pursue
its § 2(c) Robinson-Patman Act claim. We
will therefore vacate the award of
$750,000 (subsequently trebled by the
district court) on that claim.
B. BREACH OF THE AGENCY
P R O V I S I O N O F T H E
MANAGEMENT AGREEMENT
Sufficiency of the Evidence.
Sheraton claims that there is
insufficient evidence to sustain the award
of $10,260,000 for breach of the agency
provision of the Management Agreement.
Sheraton maintains that there is no
evidence of harm for that breach that is not
also captured in the itemization of possible
d a m ages set forth in the jury
interrogatories on the verdict form. On
that form, the jury awarded $10,260,000
for breach of the agency provision, and
also separately awarded $250,000 for
purchasing services and $222,000 for
Workers’ Compensation. It awarded no
damages for the other categories listed on
the verdict form: the frequent traveler
program, the reservations system, “usable
denials” practices, complimentary rooms
practices, or for any other contractual duty.
The relevant interrogatory asks jurors:
“[w]hat damages, if any, do you award to
plaintiffs for a breach of the Management
Contract concerning each of the following.
. . .”
Hancock responds by arguing that
17 Indeed, given the nature of
Hancock’s claimed damages, duplicative
recovery is not only possible, it is exceedingly probable if not inevitable.

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14
the evidence of the breach of the agency
provision extended beyond the rebate
payments, and suggests several possible
bases for the $10,260,000 award. We are
not persuaded. For example, Hancock
relies upon the Workers’ Compensation
program. However, as noted, the jury
separately awarded $222,000 for that
program. Hancock cites the level of
usable denial practices and the frequent
travelers program, which were itemized on
the verdict form. However, the jury
awarded no damages for them. Hancock
also cites an unexplained and unquantified
item that it refers to as a bogus relocation
expense. However, no such item was
listed on the verdict form. Lastly,
Hancock argues that Sheraton swept
certain of its bank accounts and claims that
also supported an award of damages.
However, the sweeping of accounts
occurred after termination of the agency
provision. Thus, none of those
e x p l a n a ti o n s s u p p o rt s a w a r d i n g
$10,260,000 for breach of the agency
provision. A lte rn ati ve ly, H a n c o c k
contends that the jury could have awarded
damages on the theory that a fiduciary
breach entitled Hancock to disgorgement
of the fees it paid to Sheraton over the life
of the Management Agreement. Hancock
claims that the award of $10,260,000
represents 15% of the $68,400,000
Hancock paid. Citing the Restatement
(Second) of Agency, § 469, Hancock
suggests that Sheraton lost its right to
compensation because it wilfully breached
its contractual obligations and that
disgorgement is an appropriate remedy for
fiduciary breach. We disagree.
First, the jury made no finding of
wilful breach of contract and it was never
instructed on applying principles of
disgorgement. Second, the jury verdict
includes a specific finding for breach of
fiduciary duty and the jury listed an
amount of $1,100,000 as damages for that
breach. Accordingly, we find no support
for the award of $10,260,000, and will
therefore vacate that award.
C. PUNITIVE DAMAGES
Sheraton challenges the punitive
damage award on several grounds. It
argues that the award was not supported by
clear and convincing evidence, that the
relevant jury instructions were erroneous,
and that the award was excessive.
Sheraton argues on appeal that the
District of Columbia standard of proof on
Hancock’s punitive damages claim applies
and that, under that standard, punitive
damages can be awarded “only if it is
shown by clear and convincing evidence
that the tort committed by the defendant
was aggravated by egregious conduct and
a state of mind that justifies punitive
damages.” Johanthan Woodner Co. v.
Breeden, 665 A.2d 929, 938 (D.C. 1995).
Hancock argues otherwise and claims that
Delaware law governs the standard of
proof and, under that standard, the
preponderance of evidence standard
applies to punitive damages. See Cloroben
Chem. Corp. v. Comegys, 464 A.2d 887,
891 (Del. 1983).
The district court instructed the jury
that it must find the elements of punitive
damages by a preponderance of the
evidence. Sheraton did not object to that

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15
instruction. We have held that this type of
error is fundamental error entitling a
defendant to a new trial; it is not subject to
waiver. Beardshall v. Minuteman Press
Int’l, Inc., 664 F.2d 23 (3d Cir. 1981).
However, Sheraton submitted proposed
jury instructions that did not include an
instruction that entitlement to punitive
damages must be established by clear and
convincing evidence. Therefore, assuming
that the instruction was wrong, it was
tantamount to invited error. U.S. v. West
Indies Transport, Inc., 127 F.3d 299, 306
(3d Cir. 1997) (holding that error in
challenged jury instruction was invited,
and thus did not provide basis for reversal,
when defendants failed to request
instruction that they asserted on appeal and
their proposed instruction was remarkably
similar to that actually given).
In ruling on Sheraton’s post-trial
motion, the district court determined the
amount of the punitive damages to be
$11,610,000. That included the award of
$10,260,000 for breach of the agency
agreement. Since we are vacating the
award for breach of the agency agreement,
we must concomitantly reduce the punitive
damage award so that it only reflects the
surviving damages – $250,000 for
purchasing activities, and $1,100,000 for
common law damages, or $1,350,000.18 In
granting the remittitur, the district court
determined that punitive damages should
be one and one-half times the relevant
compensatory damages. We adopt that
ratio for the purpose of calculating the
judgment on remand for several reasons.
We review a grant of remittitur for
abuse of discretion. Gumbs v. Pueblo
Int’l, 823 F.2d 768, 771 (3d Cir. 1987).
We also afford the district court’s
assessment of punitive damages a degree
of deference since that court is familiar
with the evidence. See Keenan v. City of
Philadelphia, 983 F.2d 456, 472 (3d Cir.
1992) . Moreover, although Hancock has
cross-appealed from the grant of the
remittitur, neither party has taken issue
with the district court’s ratio.1 9
Accordingly we will reduce the punitive
damage award to $2,025,000.
IV. CONCLUSION
For the reasons stated above, we
will vacate the award of $750,000 for
violation of the Robinson-Patman Act, as
subsequently trebled by the trial court to
$2,250,000; as well as the award of
$250,000 for purchasing services, and the
$10,260,000 award for breach of the
agency agreement. We will affirm the
awards of $222,000 for Workers’
Compensation; and $1,100,000 for breach
of fiduciary duty, breach of the implied
18The district court noted that plaintiffs
did not specify an amount for breach of
W orkers’ Compensation in their
computation of relevant compensatory
damages, and it therefore did not include
that amount in its calculation.
19See State Farm Mut. Automobile Ins.
Co. v. Campbell, U.S.Sup.Ct. No. 01-1289
(April 7, 2003) (stating that “in practice,
few awards exceeding a single-digit ratio
between punitive and compensatory
damages, to a significant degree, will
satisfy due process.”).

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16
duty of good faith and fair dealing, and
intentional or negligent misrepresentation.
We will reduce punitive damages to
$2,025,000, for reasons already stated. We
remand to the district court with direction
to enter judgment consistent with this
opinion and for further appropriate
proceedings.20
20 We have considered the remaining
contentions of the parties and conclude
that we can affirm the district court’s
rulings on those issues without further
discussion.

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