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WURZBERG BROS. v. HEAD SKI CO.

November 15, 1967

Wurzberg Brothers, Inc.
v.
Head Ski Co., Inc.


Wortendyke, District Judge.


The opinion of the court was delivered by: WORTENDYKE

Plaintiff, Wurzberg Brothers, Inc. (hereinafter Wurzberg), a New Jersey corporation, with its principal place of business in the City of Paterson, in that State, is engaged in the business of selling sporting goods equipment at retail. Defendant Head Ski Co., Inc. (hereinafter Head), a Delaware corporation, having its principal place of business in Maryland, is engaged in the manufacture and nationwide distribution of metal skis and ski poles.

 Wurzberg invokes this Court's jurisdiction under Sections 1 and 2 of the Sherman Act (15 U.S.C. §§ 1 and 2) and Section 4 of the Clayton Act (15 U.S.C. § 15). Wurzberg seeks the recovery of treble damages from Head and also injunctive relief.

 The complaint alleges that the skis and ski poles manufactured by Head have gained national acceptance, and that the public demand therefor is such that sporting goods stores or ski shops which are unable to obtain Head cannot compete in the sale of metal skis or other ski products. It is charged that Head, for the purposes of eliminating competition and creating a monopoly in the sale of metal skis and ski poles, developed a franchise system whereby certain limited business entities are granted yearly franchises, terminable at the will of Head which permit a dealer to sell "Head" ski products. It is further alleged that the policy of Head under its franchise system is to (a) maintain uniform retail prices on all Head products; (b) prohibit discounts on any ski products when sold with a product manufactured or distributed by Head; (c) control the advertisement of Head and other ski products; (d) eliminate all competition between retail outlets of Head Ski products; (e) deprive the general public of discounts on ski products not manufactured by Head, when such products are sold with any Head products; and (f) eliminate competition in the sale of Head products by limiting the number of its authorized dealers.

 Wurzberg had been an authorized franchise dealer of Head prior to June 8, 1966, and as such had become a successful and profitable outlet for Head's products. During the period of the franchise, Wurzberg adhered to the retail prices suggested by Head, but refused to participate in Head's program which prohibited Wurzberg or any other store from offering discounts to the general public on any ski products when that product was sold with a product manufactured by the defendant.

 The complaint charges that the Head franchise system and its program restrain interstate commerce and have "tended to and actually created a monopoly in the line of interstate commerce in this State" to the injury of the plaintiff in its business and property. Wurzberg charges that on June 8, 1966 Head terminated Wurzberg's Franchise and refused to sell any Head products to Wurzberg; thereby eliminating Wurzberg's ability to compete with other sporting goods and/or ski shops in the market for metal skis controlled by Head. Wurzberg contends that, in consequence of the termination of its franchise by Head, Wurzberg lost and will continue to lose great profits and good will and has suffered destruction of its reputation in the retail distribution of ski products of all types. The foregoing allegations were thereafter repeated by incorporation by reference in the succeeding counts of the complaint, which, respectively, seek damages and other relief for the impairment of Wurzberg's ability to compete and to sell to the general public nationally known-products such as those manufactured by Head.

 Head has moved this Court for summary judgment upon the asserted grounds that there is no genuine issue as to any material fact and that defendant is entitled to judgment as a matter of law. In support of the motion, movant relies upon the pleadings, various depositions on file and affidavits annexed to the motion papers. A sample, but unexecuted copy of the franchise agreement between the parties for the season 1965-1966, entitled "Statement Of Mutual Agreement Between Head Ski Co., Inc. And Authorized Head Ski Dealer", concededly executed in behalf of each of the parties to this litigation, and terminated June 8, 1966, provided in pertinent part as follows:

 
"This Agreement when signed by an officer or principal of the Dealer and by Howard Head, President, Head Ski Co., Inc. constitutes the establishment of the Dealer as an Authorized Head Ski Dealer, and confers on the Dealer the right to sell Head Ski Products at retail.
 
This Agreement shall be in effect from date of acceptance by Head Ski Co., Inc. until July 31, 1966, unless otherwise terminated as herein provided.
 
Dealerships may be renewed from year to year only by mutual agreement and by the execution of a new agreement form between Head Ski Co., Inc. and the Dealer.
 
This Agreement between Head Ski Co., Inc. and the Authorized Head Ski Dealer becomes invalid with any change of ownership or change of management of the Dealer, and may not be assigned or passed on to any other Dealer or management without the written consent of Head Ski Co., Inc.
 
This Agreement may be terminated without cause at any time on written notice either by Head Ski Co., Inc. or by the Authorized Head Ski Dealer.
 
In the event of termination of this Agreement by either party, Head Ski Co., Inc. will have the prior right, but not the obligation, to repurchase from the Dealer any Head Ski Co. products then in possession of the Dealer at the original cost to the Dealer. In the event of the Authorized Head Ski Dealer terminating, liquidating, or selling his business, the Dealer agrees to notify Head Ski Co., Inc. in writing and to offer for sale to Head Ski Co., Inc. any and all Head Ski products then in the Dealer's possession at the original cost of the products to the Dealer.
 
This agreement does not confer any specific or implied exclusive territorial rights to the Authorized Head Ski Dealer. Head Ski Co., Inc. reserves the right to appoint additional Dealers from time to time in locations of its choice where in the judgment ...

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