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WHOLESALE AUTO SUPPLY CO. v. HICKOK MFG. CO.

September 13, 1963

WHOLESALE AUTO SUPPLY CO., a New Jersey corporation, Plaintiff,
v.
HICKOK MANUFACTURING CO., Inc., a New York corporation, American Safety Equipment Corporation, a New York corporation, Quality Automotive Warehouse, a New York corporation, and Frank Millman Distributors, Inc., a New Jersey corporation, Defendants



The opinion of the court was delivered by: AUGELLI

This is a private civil antitrust action allegedly under section 1 of the Sherman Act, 15 U.S.C.A. § 1, and section 2 of the Clayton Act, as amended by the Robinson-Patman Act, 15 U.S.C.A. § 13.

Plaintiff Wholesale Auto Supply Co. is a distributor of automobile accessory equipment to automobile dealers and automobile accessory retail dealers located throughout New Jersey and in areas of New York State; defendant Hickok Manufacturing Co. Inc. (Hickok) is a manufacturer of automotive safety seat belts; defendant American Safety Equipment Corporation (American) is allegedly the exclusive world-wide agent of Hickok for the sale and distribution of Hickok belts; defendant Quality. Automotive Warehouse (Quality) is an authorized warehouse distributor of Hickok belts; and defendant Frank Millman Distributors, Inc. (Millman) is a distributor of automotive accessory equipment, including Hickok belts, and is alleged to be in direct competition with plaintiff.

 Plaintiff and defendant Millman have their principal offices and places of business in New Jersey. The other defendants are located in New York.

 The complaint alleges, in the first count, that in October, 1961, defendants entered into a conspiracy, in restraint of trade in interstate commerce, to prevent plaintiff from purchasing Hickok belts unless it agreed to resell such belts to its retail trade at prices equal to those charged by Millman to the same trade, which would have been higher than prices previously agreed upon by plaintiff and its retail customers. In the second count, plaintiff alleges that the same conspiracy charged in the first count has prevented it from purchasing Hickok belts from American at prices equal to those paid by Millman to American for such belts. Plaintiff seeks, in both counts, to recover treble damages for injuries to his business under section 4 of the Clayton Act, 15 U.S.C.A. § 15. In the third and last count of the complaint, plaintiff asks for a permanent injunction to restrain defendants from continuing to commit the alleged unlawful acts charged in the first two counts.

 Defendants Hickok, American and Millman move at this time to dismiss the complaint under Rule 12(b)(6) of the Federal Rules of Civil Procedure for failure to state a claim upon which relief can be granted; or, in the alternative, for summary judgment under Rule 56(b) on the basis of the pleadings, affidavits and exhibits on file. These motions will be treated separately, and matters outside the pleadings will not be considered on the motion under Rule 12(b)(6). Moffett v. Commerce Trust Co., 187 F.2d 242, 249 (8 Cir. 1951); Dinwiddie v. Brown, 230 F.2d 465, 468 (5 Cir. 1956). Motions by Hickok and American to dismiss the complaint for lack of venue have been abandoned. Defendant Quality has not yet been served with process in this case.

 Section 4 of the Clayton Act, 15 U.S.C.A. § 15, provides, in part, that:

 'Any person who shall be injured in his business or property by reason of anything forbidden in the antitrust laws may sue therefor * * *, and shall recover threefold the damages by him sustained * * *.'

 Section 1 of the Sherman Act, 15 U.S.C.A. § 1, makes illegal 'every contract, combination * * *, or conspiracy, in restraint of trade or commerce among the several States * * *'.

 And section 2(a) of the Clayton Act, 15 U.S.C.A. § 13(a) declares it shall be:

 'unlawful for any person engaged in commerce, in the course of such commerce, either directly or indirectly, to discriminate in price between different purchasers of commodities of like grade and quality, * * * where the effect of such discrimination may be substantially to lessen competition or tend to create a monopoly in any line of commerce, or to injure, destroy, or prevent competition with any person who either grants or knowingly receives the benefit of such discrimination, or with customers of either of them: Provided, * * * That nothing herein contained shall prevent persons engaged in selling goods, wares, or merchandise in commerce from selecting their own customers in bona fide transactions and not in restraint of trade * * *'.

 In support of their motion under Rule 12(b)(6), defendants contend that the allegations of the complaint are insufficient to state a cause of action because the facts constituting the alleged conspiracy have not been pleaded with the requisite particularity and detail. See Black & Yates v. Mahogany Ass'n, 129 F.2d 227, 148 A.L.R. 841 (3 Cir. 1941); Baim & Blank, Inc. v. Warren-Connelly Co., 19 F.R.D. 108 (S.D.N.Y.1956); Krug v. International Telephone & Telegraph Corp., 142 F.Supp. 230 (D.N.J.1956). However, the Supreme Court has stated time and again, as it did in Radovich v. National Football League, 352 U.S. 445, 453, 77 S. Ct. 390, 395, 1 L. Ed. 2d 456 (1957), that '* * * the test as to sufficiency laid down by Mr. Justice Holmes in Hart v. B. F. Keith Vaudeville Exchange, 262 U.S. 271, 274 (43 S. Ct. 540, 67 L. Ed. 977), (1923), is whether 'the claim is wholly frivolous.' While the complaint might have been more precise in its allegations concerning the purpose and effect of the conspiracy, 'we are not prepared to say that nothing can be extracted from this bill that falls under the act of Congress. * * *' Id., at 274 (43 S. Ct. at 541). See also United States v. Employment Plasterers Ass'n., 347 U.S. 186 (74 S. Ct. 452, 456, 98 L. Ed. 618), (1954). ' The recent decision of the Supreme Court in Radiant Burners, Inc. v. Peoples Gas, Light & Coke Co., 364 U.S. 656, 81 S. Ct. 452, 456, 98 L. Ed. 618), (1954).' The in accord with this principle. Moreover, Rule 8(a)(2) of the Federal Rules of Civil Procedure requires only 'a short and plain statement of the claim showing that the pleader is entitled to relief.' The specific items of proof as to who said what to whom, where, and when, are more properly matters for consideration on a summary judgment motion. The allegations of the present complaint relating to conspiracy, when tested by applicable law appear to be sufficient.

 It seems that defendants misconceive the intended nature and scope of the allegations of the complaint. The take the view that plaintiff is merely complaining about the refusal of defendant Quality to fill certain orders of plaintiff for Hickok belts, and argue that a simple refusal to deal with one who fails to abide by minimum resale prices does not the antitrust laws. United States v. Colgate & Co., 250 U.S. 300, 39 S. Ct. 465, 63 L. Ed. 992 (1919). But plaintiff does not allege merely a wrongful refusal to sell by one defendant, but rather a conspiratorial boycott by a number of defendants, including one of plaintiff's competitors, to prevent plaintiff from buying and selling Hickok belts at certain prices.

 Thus, in the first count, plaintiff alleges that defendants conspired to fix resale prices to retail customers, and that they refused to permit plaintiff to purchase Hickok belts unless plaintiff agreed to resell the belts it bought at such prices. A conspiracy to fix prices is per se an unlawful restraint of trade under section 1 of the Sherman Act, and injury to the public need not be shown in order to prove such a violation. United States v. Socony-Vacuum Oil Co., 310 U.S. 150, 60 S. Ct. 811, 84 L. Ed. 1129 (1940). Such an unlawful restraint includes a conspiracy to fix resale prices, whereby competitors and others seek to force a person to charge certain prices for a product. Dr. Miles Medical Co. v. John D. Park & Sons Co., 220 U.S. 373, 31 S. Ct. 376, 55 L. Ed. 502 (1911); United States v. Bausch & Lomb Optical Co., 321 U.S. 707, 64 S. Ct. 805, 88 L. Ed. 1024 (1944); United States v. McKesson & Robbins, Inc., 351 U.S. 305, 76 S. Ct. 937, 100 L. Ed. 1209 (1956); United States v. Parke, Davis & Co., 362 U.S. 29, 80 S. Ct. 503, 4 L. Ed. 2d 505 (1960). Viewed in the light of these cases, the allegations of the first count sufficiently spell out a cause of action.

 In the second count of the complaint, plaintiff alleges that its purchases of Hickok belts from Quality were at one price, that Millman's purchases of the same item from American were at another price, and that American refused to sell the belts to plaintiff at any price. These allegations are insufficient to charge a violation of Section 2(a) of the Clayton Act. Price discrimination under that section requires at least two purchasers from the same seller at different prices. It does not include a refusal to offer a price to a customer upon goods which the customer desires to offer for resale. Shaw's, Inc. v. Wilson-Jones Co., 105 F.2d 331 (3 ...


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