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VORNADO, INC. v. CORNING GLASS WORKS

June 20, 1966

VORNADO, INC., a Corporation of the State of Kansas, Plaintiff,
v.
CORNING GLASS WORKS, a Corporation of the State of New York, Isaac Lehrhoff, trading as I. Lehrhoff & Co., and H. Schultz & Sons, a Corporation of the State of New Jersey, Defendants



The opinion of the court was delivered by: WORTENDYKE

The branch of this Court's jurisdiction invoked in this case is alleged to rest upon 15 U.S.C. § 15. The plaintiff, a Kansas corporation, claims to have been injured in its business by reason of violations of the Anti-Trust Laws by the defendants. The defendant Lehrhoff resides in the District of New Jersey, Corning Glass Works (Corning), although a corporation of the State of New York, and H. Schultz & Sons (Schultz), a corporation of the State of New Jersey, are found and have agents in the District of New Jersey. The plaintiff (Vornado), although a corporation of the State of Kansas, has its principal place of business in Garfield, New Jersey, and is found in this District.

The complaint is in six counts, but critical allegations of the first count are incorporated by reference in the succeeding counts and underlie the cause of action alleged in each of the counts.

 In the first count, the plaintiff alleges that it is engaged in interstate commerce, and purchases, distributes and sells merchandise in various States through retail department stores popularly known as 'Two Guys from Harrison'. In connection with its operations, the plaintiff operates a trading stamp plan under which it redeems, for merchandise in its retail department stores, stamps issued to its customers in connection with purchases of food in those stores. Corning is engaged in the design, manufacture, sale and distribution of household products, popularly known as 'Corning Ware' among the several States. Corning Ware is a '* * * prestige line of glass cookware having a distinctive quality of transferability to temperatures from below freezing to above boiling without damage.' Lehrhoff and Schultz are distributors of corning Ware. Plaintiff alleges that in September 1962 and prior thereto, Corning entered into agreements with Lehrhoff and Schultz by the terms of which the prices at which Lehrhoff and Schultz could sell Corning Ware to their respective customers, including Vornado, were fixed. These agreements also fixed the prices at which customers of Lehrhoff and Schultz including Vornado, could sell Corning Ware at their respective retail department stores. It is the plaintiff's contention that the foregoing agreements were intended to and did fix prices of Corning Ware, and that thereby competition in prices was reduced as between the sale by Corning's distributors to their customers, including the plaintiff, and as between the plaintiff and its competitors, in violation of the provisions of 15 U.S.C. § 1. Plaintiff claims that in consequence of such violation it was injured in its business, and accordingly seeks treble damages pursuant to 15 U.S.C. § 15.

 The second count of the complaint alleges that under date of September 20, 1962 plaintiff and Corning entered into an agreement whereby plaintiff was appointed an authorized dealer of Corning and as such became entitled to purchase Corning Ware, and to sell and distribute that product in its retail department stores. This agreement obligated Corning to supply Corning Ware to its distributors Lehrhoff and Schultz for resale to plaintiff. It is alleged that the parties operated in accordance with this agreement from September 20, 1962 until May 1963; but plaintiff charges that, in the latter month, Corning, in concert with Lehrhoff and Schultz, refused to permit the plaintiff to purchase Corning Ware, and that Corning induced these distributors not to sell Corning Ware to plaintiff because of plaintiff's refusal to engage in the price fixing scheme of the defendants. This conduct is alleged to have injured plaintiff in its business. Plaintiff seeks treble damages, and also prays injunctive relief from interference by the defendants with the sale of Corning Ware to the plaintiff.

 In the third count, after incorporation therein by reference of the allegations of the second count, it is alleged that Corning intentionally breached its agreement of September 20, 1962 with the plaintiff, whereby plaintiff suffered loss of profits and was deprived of the benefit of extensive advertising and promotional expenses, for which plaintiff seeks compensatory damages.

 The fourth count of the complaint alleges that on February 5, 1963 plaintiff was appointed an authorized dealer of Corning by the provisions of an agreement entered into between the parties. It is further alleged that on that date, by virtue of its said status as an authorized dealer, plaintiff became entitled to purchase Corning Ware, and to sell and distribute the same in its retail department stores, and that Corning became obligated to supply its distributors with Corning Ware for resale to the plaintiff. The parties to this agreement operated thereunder from the date thereof until May 1963 when, alleges plaintiff, the defendants, acting in concert, refused to permit plaintiff to purchase Corning Ware and, in violation of 15 U.S.C. § 1, induced its distributors not to sell Corning Ware to the plaintiff because of plaintiff's refusal to participate in the price fixing scheme of the defendants. It is contended that plaintiff was thus precluded from engaging in the purchase and sale of Corning Ware among the several States, and thereby lost substantial profits and the benefit of extensive advertising and promotional expenses, for which plaintiff seeks treble damages, together with injunctive relief against further interference with the sale of Corning Ware to plaintiff.

 In the fifth count, plaintiff charges Corning with an intentional breach of its agreement with the plaintiff, and claims consequential damages therefor.

 Finally, plaintiff seeks treble damages in the sixth count, which incorporates by reference the allegations of the second count, charging Corning with having prohibited plaintiff's purchase of Corning Ware from Corning's distributors by threats and intimidations constituting malicious and intentional interference with the business relationship previously enjoyed by the plaintiff with Lehrhoff and Schultz.

 The identification of Lehrhoff as a corporation and Schultz as a partnership, as set forth in the first count of the initial complaint, was revised in the first count of an amended complaint by the allegation that Isaac Lehrhoff, trading as I. Lehrhoff & Co., is a distributor of Corning Ware, and H. Schultz & Sons, a New Jersey corporation, is likewise a distributor of such merchandise. The parties have entered into a written stipulation of facts for the purpose of this action, and agreed that the facts so stipulated shall be taken to constitute the evidence upon which this Court shall base its decision. I accept that stipulation. In addition to those facts already hereinabove recited, the following facts are found.

 Although Corning was not licensed to transact business in the State of New Jersey when this action was instituted on September 3, 1963, it qualified to do so in that State on November 8, 1963 while this case was pending for decision. It may therefore defend its fair trade program in this suit. Peter Doelger Brewing Corp. v. Spindel, 186 A. 429, 14 N.J.Misc. 523 (Dist.Ct. 1936) cited with approval in Menley & James Laboratories, Itd. v. Vornado, Inc., 90 N.J.Super. 404, 217 A.2d 889 (1966); See also Commercial Credit Corp. v. Boyko, 103 N.J.L. 620, 137 A. 534 (E. & A. 1927).

 During 1962 and 1963, certain Corning research employees were stationed in a research laboratory at Plainsboro, New Jersey known as The Industrial Reactor Laboratory. These employees utilized the facilities of the reactor at this location. Corning had a one-tenth (1/10) interest in this reactor. During this same period, Corning had certain salesmen, working from their homes in New Jersey, who were reimbursed by Corning for the expenses of telephone calls made on behalf of Corning. One of these salesmen was engaged in the promotion of Corning Ware sales by Corning to its wholesale distributors, but none of the sales personnel ever called upon plaintiff except in connection with the present case.

 The involvement of plaintiff in interstate commerce and its operation of its own trading stamp plan, as alleged in the complaint, are admitted. In connection with that plan, it is stipulated that stamps are issued only in connection with food purchases; usually one stamp for every ten cents (10 cents) of the price of such merchandise. On Wednesdays, plaintiff issues its stamps at double the usual rate, and frequently issues bonus stamps for the purchase of particular food items. Fifteen hundred (1500) stamps are required to fill one of plaintiff's stamp savings books.

 Corning's products consist of articles for cooking, storing and serving of food; known as 'Corning Ware', 'Corning Ware Electromatics' and 'Pyrex Ware'. These products are purchased for use by consumers, and bear the trademarks, brands or names of Corning. Corning Ware is a line of glass ceramic utensils which are used for cooking, freezing, serving, and storing food products; on the stove, in the refrigerator, or on the table. Corning Ware Electromatics is a line of electric appliances, such as percolators and skillets, composed of glass ceramic material. The material from which Corning Ware and Corning Ware Electromatics are produced is patented; the patent having issued in 1960 to Corning as assignee of one of its employees. Pyrex Ware is a line of glass utensils also used for cooking, freezing, serving, and storing food products, and has been marketed since 1915. There are products on the market, produced by others, in the same general class as Corning Ware, Corning Ware Electromatics and Pyrex Ware which are similar in function and in the same general price range as Corning products. These similar cooking and serving utensils include those made of glass, ceramics, iron, porcelain, enamel, aluminum, copper, magnesium-alloy, stainless steel and teflon-finished or coated products. Among the manufacturers of products similar to Corning Ware and Pyrex Ware are Anchor Hocking Glass Corporation, Farberware, Wear Ever, Ecko, Revere Ware, Mirro, Regalware and Descoware. Corning Ware Electromatics products are similar to those made by General Electric, Farber, Westinghouse, Presto, Sunbeam and Mirro. Corning Ware, Corning Ware Electromatics and Pyrex Ware are in free, fair and open competition with commodities of the same general class produced or distributed by others. Merchandise distributed by Schultz and Lehrhoff among the several States includes Corning Ware, Corning Ware Electromatics and Pyrex Ware.


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