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WILLIAM COHEN & SON v. ALL AMERICAN HERO

August 15, 1988

WILLIAM COHEN & SON, INC. D.B.A. QUALITY FOODS, Plaintiff,
v.
ALL AMERICAN HERO, INC., FOOD DISTRIBUTORS, INC., HERO U.S.A., INC. and ALFONSO PEREZ, Assignee of All American Hero, Inc., jointly, severally and/or in the alternative, Defendants



The opinion of the court was delivered by: BROTMAN

 I. INTRODUCTION

 II. FACTS AND PROCEDURE

 Plaintiff William Cohen & Son, Inc., d/b/a Quality Foods is a New Jersey corporation which manufactures sandwich steak meats and other portion control meat products, and if specially requested, sells seasoned marinated steak sandwich meats. Defendant All American Hero, Inc. (hereinafter "Hero") is an operator of retail steak sandwich shops, which are either company-owned or operated by franchisees. Defendant Food Distributors, Inc. (hereinafter "FDI") is an affiliate of Hero and functions as the sole distributor of sandwich steaks to Hero's franchisees. *fn1"

 Approximately five years ago, Hero solicited the services of plaintiff for the purpose of developing and manufacturing a steak sandwich "with certain flavoring added to produce a product with a distinct and identifiable flavor which would be sold by [Hero's] franchisees." (See Plaintiff's Complaint at para. 9). The by-product of this union of sliced meat and special spices would be a carnivorous creation known to consumers as the "All American Hero Steak," a culinary concoction which would appear prominently on the menus of Hero's franchisees nationwide. The Complaint alleges that at the time plaintiff and Hero entered into their business relationship, defendant Hero formed FDI to act as the sole distributor of steak meat to its franchisees. Pursuant to the restrictive covenants of their franchise agreements, franchisees were required to purchase all of their steak meats exclusively from FDI, which established a telephone line and number on the plaintiff's premises for just such a purpose. The Complaint alleges that the sole function of FDI was to mark-up the cost of plaintiff's sandwich meats before sale to the franchisees. (See Plaintiff's Complaint at para. 10).

 After a flavorful five-year business relationship during which plaintiff purportedly served as the sole manufacturer of the All American Hero Steak Sandwich, the union grew rancid. In or around July, 1987, plaintiff notified Hero of its decision to terminate the latter's line of credit because of an alleged accrued arrearage in the amount of $ 99,264.15, excluding interest charges. Purportedly as a result of plaintiff's refusal to extend further credit, Hero instructed its franchisees to terminate all business dealings with plaintiff and to place all further steak sandwich orders with FDI through a Florida telephone number. *fn2"

 On August 24, 1987, plaintiff filed suit in this court alleging violations of the federal antitrust laws, tortious interference with business relationship and breach of contract. Contemporaneous with the filing of their responsive pleadings, defendants moved to dismiss or, in the alternative, for summary judgment on Count I of the Complaint, which alleges the formation of an illegal tying arrangement designed to foreclose Hero's franchisees from access to the wholesale steak market in purported violation of Section 1 of the Sherman Act, 15 U.S.C. § 1, and Section 4 of the Clayton Act, 15 U.S.C. § 15.

 III. DISCUSSION

 Dismissal of a complaint, or of a claim in a complaint, for failure to state a claim is permissible only when it appears "beyond doubt that plaintiff can prove no set of facts in support of his claim which would entitle him to relief." Conley v. Gibson, 355 U.S. 41, 44-45, 2 L. Ed. 2d 80, 78 S. Ct. 99 (1957); Bryson v. Brand Insulations, Inc., 621 F.2d 556, 559 (3d Cir. 1980); Fed. R. Civ. P. 12(b)(6). On a motion to dismiss the complaint, the court must review plaintiffs' allegations in the light most favorable to them, and draw all reasonable inferences in their favor. Bryson, supra; Mortensen v. First Federal Savings and Loan Association, 549 F.2d 884, 891 (3d Cir. 1977). Despite the liberal pleading requirements, the court need only accept the truth of facts. "Conclusory allegations, unsupported by facts, cannot withstand a motion to dismiss." See County of Cook v. MidCon Corp., 574 F. Supp. 902, 920 (N.D. Ill. 1983), aff'd 773 F.2d 892 (7th Cir. 1985).

 Alternatively, Fed.R.Civ.P. 56(c) provides that summary judgment may be granted when the materials of record "show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law." Hersh v. Allen Prods. Co., Inc., 789 F.2d 230, 232 (3d Cir. 1986); Lang v. New York Life Insurance Co., 721 F.2d 118 (3d Cir. 1983). In deciding whether an issue of material fact does exist, the court is required to view all doubt in favor of the non-moving party. Meyer v. Riegel Prods. Corp., 720 F.2d 303, 307 (3d Cir. 1983), cert. denied, 465 U.S. 1091, 104 S. Ct. 2144, 79 L. Ed. 2d 910 (1984); Knoll v. Springfield Township School District, 699 F.2d 137, 145 (3d Cir. 1983); Smith v. Pittsburgh Gage and Supply Co., 464 F.2d 870, 874 (3d Cir. 1972). The threshold inquiry is whether there are genuine issues that properly can be resolved only by a finder of fact because they may reasonably be resolved in favor of either party. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 106 S. Ct. 2505, 2511, 91 L. Ed. 2d 202 (1986). The Supreme Court has interpreted Fed. R. Civ. P. 56(c) as mandating:

 
. . . the entry of summary judgment, after adequate time for discovery and upon motion, against a party who fails to make a showing sufficient to establish the existence of an element essential to that party's case, and on which that party will bear the burden of proof at trial.

 Celotex Corp. v. Catrett, 477 U.S. 317, 106 S. Ct. 2548, 2553, 91 L. Ed. 2d 265 (1986). Thus, if the plaintiff's evidence is merely "colorable" or is "not significantly probative," summary judgment may be granted. ...


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