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Bravman v. Bassett Furniture Industries Inc.

filed: February 16, 1977.

AARON BRAVMAN, APPELLANT
v.
BASSETT FURNITURE INDUSTRIES, INC. AND BASSETT MIRROR CO., INC.



Seitz, Chief Judge, Aldisert and Gibbons, Circuit Judges. Seitz, Chief Judge, concurring and dissenting in part.

Author: Gibbons

Opinion of the Court

GIBBONS, Cir. J.:

This is an appeal from a final order of the district court granting the defendants' motion for directed verdicts in a suit in which plaintiff alleged violations of the federal antitrust laws and a state law claim for breach of contract. We reverse and remand for trial.

The case started as a diversity breach of contract action by Aaron Bravman, a furniture manufacturers' sales representative, against Bassett Furniture Industries, Inc. (Bassett Furniture), a furniture manufacturer. Bravman was granted leave to amend his complaint to include Bassett Mirror Co., Inc. (Bassett Mirror) as an additional defendant and to allege violations of Sections 1 and 2 of the Sherman Act, 15 U.S.C. §§ 1, 2, and Section 3 of the Clayton Act, 15 U.S.C. § 14. Bravman's claim under Section 3 of the Clayton Act was dismissed on a motion for summary judgment*fn1 and on November 11, 1975, a jury trial commenced with respect to the remaining claims. At the conclusion of Bravman's evidence the court granted defendants' motion for directed verdicts. No opinion was filed. Before proceeding to an examination of the evidence to determine whether the directed verdicts were properly granted a general outline of the relationships between the parties is appropriate.

Bravman is a furniture manufacturers' sales representative who solicits orders for the sale of furniture products of his client manufacturers to department stores, furniture stores, and buying offices. Bassett Furniture is a large manufacturer of wood residential furniture, including case goods and accessory tables.*fn2 Bassett Mirror is a manufacturer of mirrors, pictures, picture frames, space dividers, and similar items. Bassett Furniture and Bassett Mirror are separate corporations. According to a tendered but rejected offer of proof they have a number of common directors.

From June 1955 to May 1959 Bravman sold case goods for Bassett Furniture in an assigned area in eastern Pennsylvania. Under this relationship Bravman was not restricted from selling the products of other manufacturers, so long as those products were not directly competitive with Bassett's case goods. During this period Bravman sold products of other furniture manufacturers which were not competitive with Bassett's case goods, including upholstered furniture, chairs, and outdoor summer furniture.

In May 1959, Bassett Furniture reorganized its marketing methods and offered Bravman the opportunity to sell the products of its table division as well as its case goods, and to sell the products of Bassett Mirror. This offer contemplated that Bravman's assigned sales territory would be reduced, and that he agree not to represent any other furniture manufacturers. Bravman accepted the offer and terminated his relationships with all other furniture companies. The terms of this agreement were not reduced to writing and there was no discussion as to duration or termination. From 1959 to May 1970 Bravman represented Bassett Furniture and Bassett Mirror on an exclusive full-time basis. At that time Bravman was informed by Bassett Furniture that he no longer represented Bassett Furniture's line of table products or Bassett Mirror's line of products. Instead, he was to devote his time to the exclusive representation of Bassett Furniture selling case goods. Bravman protested, but eventually acquiesced and signed an acknowledgment agreeing to the changes. From May 1970 to September 1972, Bravman continued to sell Bassett's case goods. Bassett Furniture terminated the relationship in September 1972 because it discovered that shortly after Bravman lost the Bassett Furniture table line and the Bassett Mirror product line he undertook the representation of other furniture manufacturers selling furniture other than case goods. This lawsuit followed. In deciding whether the district court properly granted the directed verdicts against Bravman we must examine the evidence offered by Bravman to determine separately as to each cause of action alleged, "whether, as a matter of law, the record is critically deficient of that minimum quantum of evidence from which a jury might reasonably afford relief." Denneny v. Siegel, 407 F.2d 433, 439 (3d Cir. 1969) (collecting cases).

I The Contract Claim

Bravman alleges that the contractual relationship between him and the defendants was one which would continue for a reasonable time which had not expired, and that the relationship was breached: (1) in May 1970 when Bassett Furniture withdrew its table line and Bassett Mirror withdrew its entire product line from his representation, and (2) when Bassett Furniture terminated the entire relationship in September 1972. The defendants contend that the relationship was terminable at will, and that even if it was not the September 29, 1972 termination was justified by Bravman's breach of contract in handling the lines of other furniture manufacturers. Bravman contends that Bassett Furniture waived the exclusive dealing requirement of their agreement by a course of conduct in which his allotment of Bassett Furniture case goods was reduced far below what he could normally sell were he to concentrate his sales efforts on selling Bassett case goods exclusively. In the absence of an opinion we do not know which of the defendants' contentions was relied on by the district court in granting the motion for directed verdicts. On this record, however, neither ground suffices to justify a directed verdict in favor of either Bassett Furniture or Bassett Mirror.

All parties have argued the diversity contract claim on the assumption that Pennsylvania law governs. Both defendants and plaintiff urge that the appropriate Pennsylvania law with respect to the duration of their employment agreement is found in the cases dealing with employment contracts. Under Pennsylvania law an employment contract which contains no specific provision respecting duration or termination is presumed to be terminable at will unless the party asserting a contrary construction can offer evidence to rebut the presumption.

" The general rule is that when a contract provides that one party shall render service to another, or shall act as his agent, or shall have exclusive sales rights within certain territory, but does not specify a definite time or prescribe conditions which shall determine the duration of the relation, the contract may be terminated by either party at will. . . . It is true that such a result does not follow in every instance, because it is the intention of the parties which is the ultimate guide, and, in order to ascertain that intention, the court may take into consideration the surrounding circumstances, the situation of the parties, the objects they apparently have in view, and the nature of the subject matter of the agreement. " (Quoting Slonaker v. P. G. Publishing Company, 338 Pa. 292, 296, 13 A. 2d 48, 50 (1940)).

The burden was, of course, upon the plaintiff, who was asserting to the contrary, to overcome the presumption that the contract was terminable at will. . . . This, he could do by proving the circumstances surrounding the execution of the contract, the situation of the parties, the objects they apparently had in view and the nature of the subject matter of the agreement from which the jury could infer that the contractual relationship contemplated by the agreement was to endure for a reasonable time or for some particular period.

Lubrecht v. Laurel Stripping Company, 387 Pa. 393, 396, 127 A. 2d 687, 689 (1956) (citations omitted); accord, Cummings v. Kelling Nut Co., 368 Pa. 448, 451, 84 A. 2d 323, 325 (1951); Jackman v. Military Publications, Inc., 350 F.2d 383, 385 (3d Cir. 1965); Mayerson v. Washington Manufacturing Co., 58 F.R.D. 377, 382-83 (E.D. Pa. 1972). Besides recognizing that the presumption of "terminable at will" may be rebutted by evidence showing a contrary understanding by the contracting parties, the Pennsylvania cases also recognize that the presumption may be overcome by evidence showing that the plaintiff-employee gave the defendant-employer consideration in addition to the employee's normal services.*fn3 Upon a showing that an employee has rendered such additional consideration, e.g., sacrificing other employment opportunities, the duration of the employment contract is deemed to be for a reasonable period of time.

" It is the settled law of agency that if the agent or employee furnishes a consideration in addition to his mere services, he is deemed to have purchased the employment for at least a reasonable period where the duration of the employment is not otherwise defined. " . . . " If the principal received for his promise to employ the agent considerations other than a mere promise by the agent to serve, and no time is specified by the terms of the agreement, the principal's promise is interpreted as a promise to employ the agent for a time which is reasonable in view of the purposes of the party giving the consideration. "

Cummings, supra, 84 A.2d at 327 (quoting 4 Williston on Contracts (Rev. Ed.) § 1027-A (p. 2847 et seq.)); see e.g., Mayerson, supra, 58 F.R.D. at 383; Lucacher v. Kerson, 158 Pa. Super. 437, 45 A. 2d 245 (1946). Bravman argues that the evidence is sufficient to support a jury finding either that it was the express understanding of all of the parties to the agreement that the employment contract was not terminable at will, or that there was no express understanding, but Bravman gave defendants such additional consideration as made the duration of the employment agreement a reasonable period of time. We agree.

The evidence suggests that from 1955 to May of 1959, Bravman was an established furniture manufacturers' sales representative, whose representation included, but was not limited to, Bassett Furniture. By representing a number of furniture manufacturers Bravman was able to offer the customers on whom he called a full line of furniture. In consideration for his giving up the representation of other furniture manufacturers Bravman was granted the exclusive right to solicit orders for the Bassett Furniture table and case goods product lines, and for the Bassett Mirror product line. The evidence also established that during the employment relationship Bravman personally guaranteed to Bassett Furniture and Bassett Mirror the credit worthiness of many of the accounts from whom Bravman solicited orders. In 1969 Bassett Furniture insisted that Bravman hire, at his own expense, a full time associate to help cover Bravman's assigned territory. Between 1959 and 1969 Bravman turned down various opportunities to represent other furniture manufacturers. Bravman's only source of compensation for the effort expended in developing accounts in his assigned territory was commissions on orders which Bassett Furniture or Bassett Mirror chose to accept. In May of 1970 Bravman was called to Bassett, Virginia and told that the Bassett Furniture table line was to be taken away from him, and that since it was customary for the salesmen who represent the Bassett table line to represent Bassett Mirror also, that line, too, was to be taken away. Bravman protested vigorously, contending the new arrangement was a breach of their undertaking. Despite the protest Bassett Furniture requested Bravman to sign a writing agreeing to these changes. The writing was on Bassett Furniture's letterhead, dated May 12, 1970, and reads:*fn4

Recommendations for Aaron Bravman's Territory:

1. Table Line will be separated and combined with Dankman's territory for new table man.

2. Bravman will maintain present associate.

This writing contains several signatures, including Bravman's. He testified that when he protested the termination of his representation of the Bassett Furniture table line and the Bassett Mirror product line, a representative of Bassett Furniture told him: "Please do me a favor and go in and sign this damn thing." To which he responded: "I will do it over strenuous objection." Bravman then signed the writing.

From this evidence the jury could have inferred the following: (1) that Bravman had between 1959 and 1970 furnished to defendants consideration in addition to his mere services, including the foregoing of representation of other manufacturers, the guaranty of credit of some accounts, and the services of an associate; (2) that in May of 1970 Bassett Furniture recognized that the relationship was not terminable at will when it insisted upon obtaining Bravman's signature on a writing acknowledging a change in the employment relationship; (3) that the writing Bravman was asked to sign made no reference to the duration of the relationship, and thus the prior arrangement was unchanged in this respect; i.e., it was still not terminable at will; and (4) that the writing Bravman was asked to sign showed that he was to furnish consideration in addition to his mere services; namely, the continued services of an associate. Making these inferences, the jury could well have concluded that Bravman met his burden of overcoming the presumption that the employment relationship was terminable at will, and that the relationship was intended to continue for a reasonable period of time. Thus, we cannot sustain a directed verdict on the theory that the employment relationship was terminable at will.

Bassett Furniture contends that even assuming the relationship was not terminable at will it was justified in terminating it because Bravman breached the agreement in selling the products of other furniture manufacturers. This argument is without merit as a basis for supporting the directed verdict. It must be recalled that prior to 1959 Bravman sold Bassett Furniture case goods on a non-exclusive basis, that is, along with complementary but non-competing lines of furniture. The evidence suggests that between 1959 and 1970 the parties understood that Bravman's representation of Bassett Furniture and Bassett Mirror was to be exclusive. The evidence also suggests that during this period Bassett Furniture and Bassett Mirror were capable of filling the majority of the sale orders which Bravman could obtain while devoting his sales efforts to their exclusive representation. Bravman testified that in 1970 and 1971, after the removal of the table and mirror product lines, Bassett Furniture's ability to fill the sales orders for case goods which its sales representatives obtained was substantially impaired due to certain production and marketing conditions. As a result, Bassett Furniture rationed the supply of case goods which each sales representative was allowed to sell. Due to this rationing Bravman was able to sell his allotted quota with far less than full-time effort. He testified that the withdrawal of the table and mirror product lines, coupled with the shortage of supply of case goods resulted in a substantial curtailment of his income. The jury could well have inferred from these circumstances that the parties intended the restoration of the pre-1959 relationship at least until Bassett Furniture was able to supply Bravman with enough case goods to justify a full-time sales effort. Alternatively, the jury could have found that since a full-time sales effort was no longer necessary to sell the allotted quota of case goods Bassett Furniture's insistence on enforcement of an exclusive sales relationship was for illegal purposes, and could not be relied upon as a defense to its own breach of contract.*fn5 Thus, Bassett's alternative theory cannot sustain a directed verdict. Bravman is entitled to a new trial on his breach of contract claim.

II The Sherman Act Claims

Bravman's amended complaint alleges that defendants conspired with each other, and other unknown parties, to engage in conduct which violates Sections 1 and 2 of the Sherman Act, 15 U.S.C. §§ 1, 2. The amended complaint states in relevant part:

12. Because of the understanding and agreement imposed upon them by defendants, Bravman and other sales representatives were obliged to refrain from availing themselves of opportunities to represent other companies, including companies competing with defendants, and to represent defendants or other companies, including companies competing with defendants, in territories aside from those exclusive territories assigned to them by defendants.

13. As a result of defendants' imposition of the understanding and agreement upon Bravman and other sales representatives of defendants, competitors of defendants have been foreclosed from selling through Bravman and other sales representatives, who in turn have been foreclosed from distributing the products of such companies, and retail dealers and other purchasers of residential furniture have been deprived of the benefits of free and open competition.

14. The effect of the understanding and agreement has been to restrain interstate trade or commerce and substantially to lessen competition or tend to create a monopoly in the sale of residential furniture.

The complaint also alleges that the defendants enforced the illegal restraints upon Bravman, and other sales representatives by threats of termination of their sales representative relationships, and that when defendants learned that Bravman was representing certain other furniture manufacturers, the defendants terminated their relationship with Bravman in furtherance of the conspiracy. As a result, Bravman claims to have suffered injury in his business or property within the meaning of Section 4 of the Clayton Act. 15 U.S.C. § 15.*fn6 The defendants contend: (A) that Bravman lacks standing to bring a private damage ...


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