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General Electric Co. v. Arnco Electronics

Decided: July 3, 1974.

GENERAL ELECTRIC COMPANY, A CORPORATION OF THE STATE OF NEW YORK, PLAINTIFF,
v.
ARNCO ELECTRONICS, A CORPORATION OF THE STATE OF NEW JERSEY, DEFENDANT



Schreiber, J.s.c.

Schreiber

General Electric Company (G.E.) instituted this action against Arnco Electronics (Arnco) for violations of minimum retail prices fixed under a contract entered into between the parties under the New Jersey Fair Trade Act. The infractions allegedly occurred on August 10, 1972 and September 16, 1972.

Arnco is a New Jersey corporation which has been engaged in the sale of electrical appliances at a store located at 77

South Washington Avenue, Bergenfield, N.J. G.E. has been engaged in the business of manufacturing various electrical appliances, including, among other items, television sets and dishwashers. G.E. utilizes a trademark "General Electric" which is associated with its products. It has extensively promoted and advertised its appliances with this trademark, and has created goodwill in connection with it.

G.E. and Arnco entered into a minimum retail price agreement in November 1968. The contract has remained viable since that time. Under its terms Arnco agreed that it would not sell any fair-traded G.E. products at less than the minimum retail price stipulated, and would not, in connection with any sale of fair-traded products, make any discounts, allowances or concessions of any kind or character which would have the effect of decreasing the selling price. G.E. had the right in its absolute discretion to withdraw any or all of the products from the list of minimum retail prices and to add to or change or revise the prices of the products listed. Attached to the agreement was a list of the minimum retail prices for the enumerated G.E. commodities. That list stated that the minimum retail prices did not apply to: (1) sales to G.E. employees or to employees of distributors or dealers; (2) sales to governmental agencies buying for their own use, and (3) sales to a commercial or institutional customer buying four or more products for its own use and not for resale.

After execution of the contract G.E. from time to time sent to Arnco modifications of the list of minimum retail prices. It made one significant change in its exemptions by deleting the requirement that the commercial or institutional customer had to buy four or more units for its own use.

Nonretail or wholesale sales did not fall under the minimum retail price proscription. The parties stipulated that G.E. excepted from its fair trade minimum price schedules sales to apartment house builders, large residential developers

and various commercial enterprises which distributed the products in the form of prizes. G.E. had a Sales Division which dealt directly with the buyers. A resale might or might not occur in these situations. For example, the apartment house builder could, after completion, retain the building and rent the apartments. Or it was possible that a company's prize might not involve a sale.

In the latter part of 1971 or the early part of 1972 Arnco instituted a program under which it distributed discount cards which entitled the holder to purchase appliances through Arnco's wholesale organization division. Sales made by the so-called Arnco wholesale organization division were admittedly made at prices below the minimum charges that had been fixed by G.E. and in the same showroom and place as its retail business. Arnco's plan consisted of going to an employer or organization and requesting that entity to distribute, either through the employer or Arnco, discount cards to its employees or members. In this fashion the employer or association would be able to take credit for having given its employees a benefit. Although Arnold Rosen, who is president of Arnco, testified that when this arrangement was made with the Lipton Tea Company as part of the agreement with that company it was understood that Lipton Tea Company would purchase appliances for promotional purposes from defendant. Conspicuous by its absence was any evidence that such an arrangement was part and parcel of the agreement with other employers or organizations. For example, he did not testify to any such understanding when he obtained the services of the Bergen County Educational Association, an organization of school teachers, to distribute Arnco's discount cards to its members.

If any individual appeared with the discount card, it was assumed that he or she was its rightful holder. No verification or check of any kind was made. If purchases were made, cards would be made available to the members of the ...


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