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HUDSON'S BAY CO. FUR SALES v. AMERICAN LEGEND COOP

December 19, 1986

Hudson's Bay Company Fur Sales Incorporated, Plaintiff
v.
American Legend Cooperative, Defendant



The opinion of the court was delivered by: LECHNER

 Introduction

 Plaintiff, Hudson's Bay Company Fur Sales Incorporated ("Hudson"), instituted this antitrust action against the defendant, American Legend Cooperative ("Legend"), for purported violations of sections one *fn1" and two *fn2" of the Sherman Act (the "Act"), as amended, 15 U.S.C. §§ 1 and 2 (Count I), for misuse of trademark and violation of the Lanham Trademark Act, 15 U.S.C. § 1121 (Count II) and for pendent claims of tortious interference with contractual relationships (Count III), tortious interference with prospective economic advantage (Count IV) and breach of contract (Count V). *fn3"

 Hudson and Legend are involved in interstate commerce in the marketing and sale of mink pelts produced by mink ranchers in the United States. In particular, Hudson acts as a marketing agent and broker for mink ranchers. As such it receives, warehouses, displays and conducts auction and private sales of mink pelts. Legend was created in late 1985 when the two major American mink farmer associations, Emba Mink Breeders Association ("EMBA") and Great Lakes Mink Association ("GLMA") unified. *fn4" EMBA and GLMA own various trademarks used in the marketing of mink pelts and garments. These trademarks, the most important of which is the "Blackglama" mark, were in effect transferred to Legend which polices the use of the trademarks.

 Legend, in an effort to promote sales of mink pelts produced by its members, has restricted use of the various EMBA and GLMA trademarks to those mink pelts auctioned through the Seattle Fur Exchange ("SFX"), a subsidiary of Legend. The various trademarks, previously available to a qualified pelt of any member of EMBA or GLMA who sold through an auction house which had a contract with EMBA or GLMA or both, are now available only to pelts auctioned or otherwise sold through SFX. Hudson claims this restriction violated and continues to violate the antitrust laws.

 On July 25, 1986, Hudson filed its verified complaint and an Order to Show Cause requesting, among other forms of relief, a temporary restraining order. Hudson contends: (1) Legend's trademark restriction constitutes an unlawful tying arrangement restraining trade in the American fur auction market, and (2) Legend and others have conspired to monopolize the American mink pelt industry.

 Following a hearing and thereafter a denial of the requested temporary restraining order, pre-trial discovery was conducted and completed. By agreement among the parties and the court, the matter was tried on October 8, 9, 14, 15 and 16, 1986. Hudson and Legend submitted written summations on October 23, 1986 and presented oral rebuttals on October 27, 1986. After a review of the Stipulations by the parties, the evidence presented, the proposed findings of facts and conclusions of law, the trial briefs and summations (both written and oral), I find, for the reasons stated below, Hudson has failed to prove that Legend either (1) engaged in a restraint or attempted to restrain trade in violation of section one of the Sherman Act, or (2) monopolized or attempted to monopolize the markets in which it competes in violation of section two of the Sherman Act. Hudson has failed to prove the restriction on the use of the various trademarks (owned by EMBA and GLMA and policed by Legend) constitutes an illegal tying arrangement. *fn5"

 This opinion, including the legal discussion, constitutes my Findings of Fact and Conclusions of Law. All proposed findings of fact and conclusions of law inconsistent with those set forth herein are rejected in accordance with Rule 52 of the Federal Rules of Civil Procedure.

 I. Findings of Fact

 A. The Parties and Entities Involved

 1. Hudson is a corporation organized under the laws of New York, with its place of business presently at Carlstadt, New Jersey. [Stipulation 1.]

 2. Hudson is a wholly owned subsidiary of the Hudson's Bay Company, a Canadian corporation. The Hudson's Bay Company is a general merchandising corporation, which owns and operates several major department stores, has a major interest in a real estate development organization and in oil and gas interests and had annual revenues during 1985 of approximately U.S. $ 4 billion. [Stipulations 2 and 3.]

 3. Hudson acts as agent and broker for the sale of fur pelts and conducts auction sales of fur pelts. In the course of its business, Hudson, inter alia, receives, warehouses, sorts, grades, displays and conducts auction sales (and private sales) of mink pelts. [Stipulation 8.]

 4. On October 9, 1985 Legend was incorporated and organized under the laws of Wisconsin, and has its place of business in Seattle, Washington. [Stipulations 14 and 15.] Legend is an association of mink producers engaged in interstate and foreign commerce of its members' mink products. [Trans. 10/14 at 196:12 - 197:25.]

 5. Legend came into being through the unification of EMBA, a corporation, organized under the laws of Wisconsin, with its place of business in Seattle, Washington, and GLMA, a non-stock, not-for-profit corporation, organized under the laws of Wisconsin, with its place of business in Seattle, Washington. Only domestic mink ranchers who sell at least 1200 pelts *fn6" through an auction house or agency that has a contract with Legend can become voting members of Legend. [Trans. 10/14 at 97:3-11; 98:23 - 100:13; D-27; Stipulation 16.] Nonvoting membership in Legend is available to non-domestic fur producers. [D-27.]

 6. SFX is a Washington corporation with its principal place of business in Seattle, Washington and is wholly owned and controlled by Legend. SFX is in the business of collecting and auctioning fur pelts. SFX was privately owned until 1973, when it was acquired by EMBA. [Stipulations 26 and 27.]

 7. Hudson and SFX derive their income primarily from a brokerage commission paid by the seller/rancher and a percentage fee paid by the buyer. [Stipulation 54.]

 8. SFX competes with Hudson in the business of collecting and auctioning mink pelts and other fur pelts in the United States. For the last several years, only Hudson, SFX and Elbeco Marketing Co., Inc. ("Elbeco") have conducted auctions of mink pelts in the United States.

 10. Amerimink is an association of mink farmers, incorporated under the laws of Washington, with its place of business in Bothell, Washington. [Stipulation 18.]

 11. Since 1970 and through the 1986 auction season, Elbeco has been the exclusive agent for the sale of mink pelts produced by the members of Amerimink that are sold under the ...


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