Appendix — Federated Department Stores, Inc. v. Moitie
Supreme Court brief1981
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No. 79-1517
IN THE
Supreme Court of the United States
OCTOBER TERM, 1980
FEDERATED DEPARTMENT STORES, INC., ef al.,
Petitioners,
ve
MARILYN MOITIE AND FLoyp R. BROWN, ETC.,
Respondents.
On Writ Of Certiorari To The United States Court Of Appeals For
The Ninth Circuit
JOINT APPENDIX
JERROLD N. OFFSTEIN JEROME I. CHAPMAN
111 Sutter St. ARNOLD & PoRTER
San Francisco, CA 94104 1200 New Hampshire
(415) 421-8166 Ave., N.W.
Attorney for Respondent Washington, D.C. 20036
Floyd R. Brown (202) 872-6750
Attorney for Petitioner
Federated Department
Stores, Inc.
JOHN C. Grosz
SOLIGER & GORDON
250 Park Ave.
New York, NY 10017
(212) 687-1140
Attorney for Petitioner
Saks & Company
PETITION FOR CERTIORARI FILED MARCH 28, 1980.
CERTIORARI GRANTED NOVEMBER 17, 1980.
$e
er i
PRESS OF BYRON S. ADAMS PRINTING, INC., WASHINGTON, D.C.
DOCKET ENTRIES
1976
June 15
June 22
July 9
July 14
July 14
July 23
August 6
INDEX TO JOINT APPENDIX
Moitie v. Federated Department Stores,
Inc., No. C-76-1110-SW [‘‘Moitie P’]...
Brown vy. Federated Department Stores,
Inc., No. C-76-1210-SW [‘‘Brown [’]...
Moitie v. Federated Department Stores,
Inc., No. C-77-0576-SW [‘‘Moitie IT’] ..
Brown vy. Federated Department Stores,
Inc., No. C-77-0577-SW [‘‘Brown IT’] ..
Complaint in Brown ].............005.
Answer and Counterclaim of Defendant
Federated Department Stores, Inc. in
EE Gs ud one ueaweavds-ecansvaeeacka
Answer of Defendant Saks & Company
IN BrOWN 1... ccc ec eee ees
Plaintiffs’ Reply to Counterclaim of De-
fendant Federated Department Stores,
ee We NN Do ccc acavcaciovaceves
Plaintiffs’ Reply to Conditional Counter-
claim of Defendant Saks & Company in
he iain Bis cha ote Ce ead a bas
Motion of Defendants Federated Depart-
ment Stores, Inc. and Saks & Company
to Dismiss Moitie ] ............ 0.0045.
Plaintiff Marilyn Moitie’s Memorandum
in Opposition to Defendants’ Motion to
Dismiss Moitie 1.0... 6. ee ee
PAGE
17
23
29
33
37
ii
INDEX TO JOINT APPENDIX Continued
1977 PAGE
January 11 Memorandum Order of District Court
ey ene 77
January 13 District Court Order Dismissing Brown 1 — 89
January 13 Judgment in Brown f.... 2... cc ccc ccees 9]
February 17. Complaint in Brown /] ................ 93
March 21 Defendants’ Notice of Related Cases .... 103
March 21 Related Case Order re Brown I] ........ 107
April 8 Notice of Motion and Motion of Defend-
ants Federated Department Stores, Inc.
and Saks & Company to Dismiss Moitie
II] and Brown II, and Memorandum of
Points and Authorities in Support
AU ee PP een cn 109
May 16 Plaintiffs’ Memorandum of Law in Op-
position to Defendants’ Joint Motion to
Dismiss Moitie I] and Brown II (Res
NETS iy a ea P 145
May 20 Reply Memorandum of Defendants Fed-
erated Department Stores, Inc. and Saks
& Company in Support of Motion to
Dismiss Moitie [J] and Brown I]......... 175
July 6 Dissfict Court Order Denying Plaintiffs’
Motion to Remand and Granting De-
fendants’ Motion to Dismiss Moitie II
LS ee Ot 1AAE aan ees 187
July 6 Judgment in Moitie 1] and Brown I] .... 193
lii
INDEX TO JOINT APPENDIX Continued
1979 PAGE
November 15 Original Decision of the Court of
WEE Poca hue oe sauehs Pena uses can 195
November 28 Defendants’ Petition for Rehearing ..... 201
1980
January 2 Order of the Court of Appeals Denying
Petition for Rehearing................. 213
January 15 Order and Substituted Opinion of the
eure Oe UI ook oa vk ve bad ene 215
May 12 Notice of Dismissal, Reason There-
for and _ District Court Order in
re re ee ei aes oo 221
DOCKET ENTRIES
UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF CALIFORNIA
No. C-76-1110-SW [‘‘Moitie P’]
MARILYN MOITIE, individually,
and on behalf of others similarly situated,
Plaintiffs,
¥.
FEDERATED DEPARTMENT STORES, INC.,
d/b/a I. MAGNIN & Co., and BULLOCK’s
NORTHERN CALIFORNIA;
SAKS & COMPANY, d/b/a Saks FIFTH AVENUE;
and DOES I THRouGH XX,
Defendants.
Date
1976 PROCEEDINGS
Junel — Petition for Removal from Superior Court, County
of Santa Clara, (their P30343) together with copy of
summons & complaint; no process (copy to MDL
panel).
Junel — Order — conference on 9-16-76 at 9 a.m.
June! — $250 Removal Bond.
Junel — Defendants’ Notice of filing Petition & Bond on
removal.
June2 — Defendants’ notice of motion & motion for Order
extending time to respond to complaint: Affidavit
of Fousekis; Affidavit of Miller; Memo of Points &
Authorities; Proposed Order.
June2 — Stipulation & OrpeR shortening time for hearing on
above motion to 6-3-76 at 9 a.m.
June3) — Proof of Service of order re conference on 9- 16-76.
June3_ — ORDeR extending to 6-22-76 defendants’ Federated
Dept. Store & Saks’s time to respond to complaint.
June3=— Minutes: Defendants’ motion for order extending
time to respond to complaint GRANTED; hearing
continued to 7-22-76 at 9:00 a.m.
June21 — Answer of defendant Saks & Co.
June22 — ANswer & Counterclaim of defendant Federated
Dept. Stores, Inc., & Jury Trial DEMAND.
Date
1976
to
PROCEEDINGS [Moitie /]
June 24
June 24
June 25
June 25
June 25
June 25
June 28
July 6
July 7
July 14
July 14
July 19
July 23
Aug. 6
Aug. 1!
Aug. 26
Aug. 30
ORDER: Case determined to be related to
C-76-867-SW & C-76-869-GBH.
Government’s Notice of Motion & Motion to quash
subpoena, or for a protective order: Memo of
— & authorities; Exhibit A; Proposed form of
order.
Affidavit of Charles Lamont re defendants’ motion
for stay or, in the alternative, to postpone deposi-
tion.
Defendant Saks’s certificate of service.
Defendants’ notice of motion and motion for stay
pending Ist pretrial conference or, in the alter-
native, to postpone deposition; Lodged stipulation
& proposed order shortening time to hear motion;
Lodged stipulation & order re pretrial conference.
ORDER — pretrial conference scheduled for 7-21-76
vacated (SW).
Lodged Government’s notice of motion.
Defendant Saks’ amendment to conditional
counterclaim.
ORDER — Case deemed to be related to: C-76-867;
C-76-869; C-76-1363 (SW).
Plaintiffs’ reply to conditional counterclaim of
defendant Saks.
Plaintiffs’ reply to counterclaim of defendant
Federated.
ORDER relating case to: C-76-1429-SC,
C-76-1363-SC, & cases in related case order of
6-24-76 (C-76-867-SW & C-76-869-GBH).
Defendants’ Notice of Motion & Motion to dismiss.
Plaintiffs’ memo in opposition to defendants’
motion to dismiss.
Plaintiffs’ certificate of service by mail of
memorandum in opposition.
OrDeR: Pre-Trial Conference set for 12-9-76 at 9:00
a.m. and Trial on 3-21-76 at 10:00 a.m. (SW).
ORDER: Related Case to C-76-1210-RHS,
C-76-869-SW, C-76-867-SW, C-76-1363-SW, and
= lates and reassigned to Judge Williams
(SW).
Date
1977 PROCEEDINGS [Moitie I]
Jan. 11 -- JUDGMENT ENTERED against plaintiffs in favor of
defendants (SW); 1/17/77.
Mar.23 — Related Cases: C-76-867-SW; C-76-869-GBH;
C-76-1429-SW; C-76-1210-SW; C-76-1671-SW;
C-76-1110-SW; C-76-1363-SW; C-77-577-SW.,
Feb.25 — Letter from Plaintiffs’ counsel re appeal record (see
C-76-1429-SW),
Sept. 12 — Original and one copy of reporter’s transcript of
6/3/76.
No, C-76-1210-SW [‘‘Brown 1’’]
Floyd Brown, individually,
and on behalf of others similarly situated,
Plaintiffs,
Vv.
FEDERATED DEPARTMENT STORES, INC.,
d/b/a I. MAGNIN & Co., and BULLOCK’s
SOUTHERN CALIFORNIA;
SAKS & COMPANY; d/b/a SAKs FirTH AVENUE,
Defendants,
Date
1976 PROCEEDINGS
June 1S — COMPLAINT; issued summons (copy to MDL panel).
June lS — Order for private service — ABC Legal Process
Service.
June22 — ANswer & Counterclaim of defendant Federated
Dept. Stores, Inc., & Jury Trial DEMAND.
July9 =— Answer of defendant Saks.
Julyl14. — Plaintiffs’ reply to counterclaim of defendant
Federated Dept. Stores.
July14. — Plaintiffs’ reply to conditional counterclaim of
defendant Saks.
July19 — Orpber for preliminary pretrial on 9/1/76 at 11:45
a.m.
July12 — Plaintiffs’ notice of related cases (cases unnamed).
July23 — Plaintiffs’ supplemental notice of related cases
(cases: 76-869; 76-867; 76-1110; 76-1363; 76-1429).
Date
1976 PROCEEDINGS [Brown /]
Aug.11 — Received defendant Saks’ stipulation & proposed
order for continuance of preliminary pretrial con-
ference.
Aug.16 — Stipulation & OrpeR for continuance of
preliminary pretrial conference to 9-15-76 at 11:45
a.m.
Aug.30 — OrpeER: Related Case to C-76-869-SW,
C-76-867-SW, C-76-1363-SW, C-76-1110-SW, and
C-76-1429-SC (SW) and reassigned to Judge
Williams.
1977
Jan.13) — Orper: both related cases are dismissed in entirety
(SW).
Jan.13| — JUDGMENT ENTERED, 1/17/77, in favor of defen-
dants & against plaintiffs (SW).
Mar.28 — Related Cases: C-76-869SW; C-76-867SW;
C-76-1363SW; C-76-1110SW; C-76-1429SC;
C-77-577; C-76-1671.
No. C-77-0576-SW [‘‘Moitie IT’’]
MARILYN Morrie, individually,
and on behalf of others similarly situated,
Plaintiffs,
Vv.
FEDERATED DEPARTMENT STORES, INC.,
d/b/a I. MAGNIN & Co., and BULLOCK’s
NORTHERN CALIFORNIA;
SAKS & COMPANY, d/b/a Saks FIFTH AVENUE
and DOES I THroucu XX,
Defendants.
Date
1977 PROCEEDINGS
Mar.21 — Defendants’ Petition for removal from Municipal
Court of State of Calif. for County of Santa Clara,
Palo Alto-Mountain View Judicial District at Palo
Alto, their no. 36909 (copy to MDL Panel). No Pro-
cess copy of summons and complaint.
Date
1977
Nn
PROCEEDINGS [Moitie II]
Mar. 21
Mar. 21
Mar. 21
Mar. 21
Mar. 23
Mar. 29
Mar. 28
Mar. 30
April8
April 11
April 26
April 26
May 13
May 16
May 20
May 26
Defendants’ notice of filing petition for removal
and bond on removal.
Defendants’ $250 bond on removal.
Defendants’ Notice of Related Cases:
C-76-867-SW; C-76-869-SW; C-76-1110-SW;
C-76-1363-SW; C-76-1429-SW; C-76-1210-SW;
C-76-1671-SW.
Order setting conference on 7/22/77 at 10 a.m.
Stipulation-defendants have until 4/14/77 to
answer complaint.
Proof of service of order setting conference (order
of 3/23).
ORDER — Determined to be related to: C-76-867;
C-76-869; C-76-1110; C-76-1210; C-76-1363;
C-76-1429; C-76-1671, and reassigned to Judge
Williams (SW).
Status conference set for 7/22/77; reset for 7/19/77
at 9:30 a.m.
Defendant Saks & Co. notice of motion and motion
to dismiss (see C-577-SW [Brown II]): Memo of
points and authorities; Exhibits; Proposed Order.
Hearing set for Defendants’ motion to dismiss on
5/25/77.
Plaintiffs’ notice of motion; motion to remand with
supporting papers and proposed order: Affidavit of
Offstein; Memo; Exhibits; Proposed Order.
PLAINTIFFS’ MOTION TO REMAND reset for 5/25/77
at 10:00 a.m.
Defendants Federated Dept. Stores, Saks & Co.’s
memorandum of points and authorities in opposi-
tion to motion to remand: Exhibits; Proposed
order.
Plaintiffs’ memorandum of law in opposition to
a joint motion to dismiss: Proposed
order.
Defendants Federated and Saks memorandum in
support of motion to dismiss.
MINUTE OrDeR of 5/25/77: Defendants’ motion to
dismiss and Plaintiff’s motion to remand sub-
mitted.
Date
1977 PROCEEDINGS [Moitie IT]
July6 © — JupGMENT: for Defendant, entered 7/7/77 (SW).
July6 §=— Orpber: Denying plaintiffs’ motion to remand and
granting Defendants’ motion to dismiss (SW).
July7 © — Mailed Judgment and Order to counsel of record.
Aug.3 — Plaintiffs’ notice of appeal: Notice sent to counsel
Of record; Court of Appeals; Court Reporter.
Aug.9 — Plaintiffs’ designation of appeal; Statement of
Issues on Appeal.
Aug.12 — Defendants’ request for transcript and designation
of records on appeal (copy to reporter).
Sept. 12 — Made, mailed Record on appeal to Ninth Circuit
Court of Appeals.
No. C-77-0577-SW [‘‘Brown ITP’]
FLOYD R. BRown, individually,
and on behalf of others similarly situated,
Plaintiffs,
Vv.
FEDERATED DEPARTMENT STORES, INC.,
d/b/a I. MAGNIN & Co., and BULLOCK’s
NORTHERN CALIFORNIA;
Saks & CoMPANY, d/b/a Saks FIFTH AVENUE;
AND DOES I THROUGH XX,
Defendants.
Date
1977 PROCEEDINGS
Mar.21 — Petition for Removal Antitrust; no process.
Mar.21 — Notice of Filing Petition for Removal & Bond on
Removal.
Mar.21 — Bond on Removal ($250.00).
Mar.21 — Defendants’ Notice of Related Cases to: 76-867;
76-869; 76-1110; 76-1363; 76-1429; 76-1210;
76-1671.
Mar.23 — Stipulation extending time to 4-14-77 for Defen-
dants to Answer Complaint.
Mar.28 — DETERMINED TOBE RELATED TO: C-76-867; 76-869;
76-1110; 76-1363; 76-1429; 76-1210; 76-1671. (SW
& RFP).
Date
1977
PROCEEDINGS [Brown IT]
April8
April 11
April 26
April 26
May 13
May 16
May 20
July 6
July 6
Aug. 3
Aug. 9
Aug. 12
Sept. 12
Sept. 16
Sept. 19
Sept. 21
Nov. 30
Dec. 4
Defendant Saks & Co. notice of motion and motion
to dismiss: Memo of points and authorities: Table
of contents; Table of authorities; exhibits; Pro-
posed Order.
Hearing set for Defendants’ motion to dismiss on
5-25-77 at 10:00 a.m.
Plaintiffs’ notice of motion; motion to remand with
supporting papers and proposed order: Affidavit
of Offstein; Memorandum; Exhibits; Proposed
order.
PLAINTIFFS’ MOTION TO REMAND reset for 5-25-77 at
10:00 a.m.
Defendants’ motion to remand, see C-77-576-SW
[Moitie IT].
Plaintiffs’ opposition to defendants’ motion to
dismiss, see C-77-576-SW [Moitie II].
Defendants’ Federated and Saks memorandum in
support of motion to dismiss. See C-77-576-SW
[Moitie 11].
JUDGMENT: for Defendant, entered 7-7-77. See
C-77-576-SW [Moitie 11].
OrDeER: Denying plaintiffs’ motion to remand and
granting Defendants’ motion to dismiss (SW). See
C-77-576-SW [Moitie IT].
Plaintiffs’ notice of appeal: Notice sent to counsel
of record; Court of Appeals, Court reporter.
Plaintiffs’ designation of appeals; statement of
Issues on Appeal.
Defendants’ request for transcript and designation
of records on appeal. (Copy to reporter.)
Made, mailed Record of Appeal to Ninth Circuit
Court of Appeals.
Plaintiffs’ receipt for record on appeal. See
C-77-576-SW [Moitie I].
Defendants’ receipt for record on appeal. See
C-77-576-SW [Moitie Il].
Receipt from Ninth Circuit for record on appeal.
See C-77-576-SW [Moitie II].
Plaintiffs’ bill of cost. See C-77-576-SW [Moitie II].
Defendants’ Objection to bill of cost.
Date
1980
PROCEEDINGS [Brown II}
Feb. 25
Feb. 25
Mar. 7
Mar. I1
May 5
May 5
May 6
May 27
May 28
June 16
June 26
Sept. 5
Certified Copy of Ninth Circuit Court of Appeals:
Judgment of District Court reversed and remand-
ed. Costs on appeal will be borne by the respective
parties and none will be taxed. 9th CCA Orper:
Rehearing — DENIED. 9th CCA OrpER: Memo
Disposition of 11-15-79 ‘‘Withdrawn’’; attached
Opinion substituted.
Clerk’s Notice: Spreading the Mandate.
Clerk’s Notice: Spreading the Mandate returned.
Stipulation & Orper: (1) Ist pretrial conference
previously set for 3-18-80 shall be held on 4/15/80
at 9:30 a.m.; (2) Neither party shall be required to
file any further pleadings until after pleading
schedule is established at Ist pretrial conference.
ANSWER & CONDITIONAL COUNTERCLAIM by
defendant Saks & Company.
ANSWER & COUNTERCLAIM of defendant Federated
Department Stores, and Jury TRIAL DEMAND.
PRETRIAL ORDER NO. 1.
PLAINTIFFS’ ANSWER TO COUNTERCLAIM.
ANSWER by plaintiffs’ & COUNTERCLAIM to defend-
ants’ Counterclaim.
RECEIVED: Stipulation and proposed order re
discovery.
STIPULATION & ORDER: Schedule is modified re
discovery, as per order.
Received letter of counsel for defendant Federated,
confirming continuance of status conference set for
9-24-81 until 6-16-81 at 9:00 a.m.
UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
C 76-1210
FLoyD Brown, individually, and on behalf of others
similarly situated,
Plaintiffs,
Vi
FEDERATED DEPARTMENT STORES, INC., d/b/a I. MAGNIN &
Co., and BULLOCK’s SOUTHERN CALIFORNIA; SAKS &
ComMPANY; d/b/a SAKS FIFTH AVENUE,
Defendants.
COMPLAINT FOR DAMAGES AND INJUNCTIVE RELIEF
UNDER THE FEDERAL ANTITRUST LAWS
(JURY DEMANDED)
(Filed June 15, 1976)
I
Jurisdiction And Venue
1. This complaint is filed and these proceedings are in-
stituted against these defendants for violation of Section | of
the Act of Congress of July 2, 1890, as amended (15 U.S.C.
§1), entitled ‘‘An act to protect trade and commerce against
unlawful restraints and monopolies’’; commonly known as the
Sherman Act. Plaintiffs seek trebled damages and injunctive
relief under Sections 4 and 16 of the Clayton Act (15 U.S.C.
§§15, 26). This Court has jurisdiction of the subject matter
pursuant to 28 U.S.C. §1337.
2. Each of the named defendants or its agents or co-
conspirators maintains offices, transacts business, or if found
within the Central District of California and is within the
jurisdiction of this Court for purposes of service of process.
10
Many of the unlawful acts done in violation of the antitrust
laws, as hereinafter alleged, have been performed within the
Central District of California. The interstate trade and com-
merce described hereinafter is carried on, in part, within the
Central District of California.
3. Plaintiff brings this action on behalf of himself and on
behalf of all persons similarly situated in Los Angeles and
Orange Counties, State of California. The classes which plain-
tiff represents are composed of the following:
(a) All persons residing in Los Angeles and Orange Coun-
ties who during the period from 1963 to present have made
retail purchases of women’s clothing from I. Magnin on a
charge basis;
(b) All persons residing in Los Angeles and Orange
Counties who during the period from 1963 to present have
made retail purchases of women’s clothing from I. Magnin on
a check or cash basis;
(c) All persons residing in Los Angeles and Orange Coun-
ties who during the period from 1963 to present have made
retail purchases of women’s clothing from Bullock’s Southern
California on a charge basis;
(d) All persons residing in Los Angeles and Orange
Counties who during the period from 1963 to present have
made retail purchases of women’s clothing from Bullock’s
Southern California on a check or cash basis;
(e) All persons residing in Los Angeles and Orange Coun-
ties who during the period from 1963 to present have made
retail purchases of women’s clothing from Saks Fifth Avenue
on a charge basis;
(f) All persons residing in Los Angeles and Orange Coun-
ties who during the period from 1963 to present have made
retail purchases of women’s clothing from Saks Fifth Avenue
on a check or cash basis.
The members of the plaintiff classes are so numerous that
joinder in this action is impracticable. The claims of the
members of the plaintiff classes, including those of the named
plaintiff, involve common questions of law and fact which
predominate over any questions affecting only individual class
members, and a class action is superior to other methods for
the fair and efficient adjudication of this action. The named
plaintiff is a purchaser of women’s clothing from I. Magnin,
Bullock’s Southern California, and Saks Fifth Avenue. The
claims of the named plaintiff are typical of those of the other
members of the plaintiff will fairly and adequately protect the
interests of the plaintiff classes.
Il
Plaintiff
Plaintiff Floyd Brown is a resident of Laguna Niguel,
California.
il
Defendants
Federated Department Stores, Inc. (‘‘Federated’’) is
hereby made a defendant herein. Federated is a corporation
organized and existing under the laws of the State of
Delaware. During the period of time covered by this com-
plaint, Federated has engaged in the retailing of women’s
clothing in Southern California under the trade name of ‘‘I.
Magnin & Co.”’ The principal offices of I. Magnin & Co. are
located in San Francisco, California. During the period of
time covered by this complaint, Federated has _ also
commenced the retailing of women’s clothing in Southern
California under the trade name ‘‘Bullock’s Southern
California,’’ with principal offices located in Los Angeles,
California.
(b) Saks & Company (‘‘Saks’’) is hereby made a defen-
dant herein. Saks is a corporation organized and existing
under the laws of the State of New York, with its principal
12
place of business in New York City. Saks is a wholly owned
subsidiary of Gimbel Brothers, Inc. During the period of time
covered by this complaint, Saks has been engaged in the
retailing of women’s clothing in Southern California under
the trade name ‘‘Saks Fifth Avenue.”’
IV
Agents And Co-conspirators
The defendants, and each of them, at all times mention-
ed herein, were the agents of all other defendants, and each
of them, and were acting in the course and scope of said
agency. Various other corporations and individuals not made
defendants in this complaint participated as co-conspirators
with the defendants named in the offenses charged herein and
performed acts and made statements in furtherance thereof.
Vv
Trade And Commerce
The defendants are among the largest retailers specializ-
ing in the sale of women’s clothing in Southern California.
They have an image recognized in the women’s clothing in-
dustry, and by the consumer, of selling fashionable women’s
clothing of quality fabrics and favored styling. In 1973, they
accounted for approximately $70 million in retail sales of
women’s clothing in Southern California.
In the retailing of women’s clothing, the difference be-
tween the cost price of an item and its retail price is known as
the ‘‘markup.’’ Retailers maintain ‘‘markup lists’? which
show the retail price to be charged for items purchased at a
given cost level. These markup lists are used by retailers to
price items sold to the consumer.
13
Vi
Offenses Charged
Beginning at least as early as 1963, and continuing
thereafter until April 1974, the defendants and co-conspirators
engaged in a continuing combination and conspiracy in
unreasonable restraint of trade and commerce, in violation of
Section ! of the Sherman Act (15 U.S.C. §1).
The aforesaid combination and conspiracy has consisted
of a continuing agreement, understanding, and concert of ac-
tion among defendants and co-conspirators to raise, fix,
maintain and stabilize prices charged by defendants for the
sale of women’s clothing in Southern California, including
Los Angeles and Orange Counties.
In formulating and effectuating the aforesaid combina-
tion and conspiracy, the defendants and co-conspirators did
those things which they combined and conspired to do, in-
cluding, among other things, the following:
(a) met and engaged in telephone conversations to
discuss prospective markups and retail prices for the
sale of women’s clothing to customers of defendants;
(b) exchanged markup charts used by defendants in
establishing the retail price of women’s clothing sold
to customers of defendants;
(c) established agreed-upon markups and retail prices
for the sale of women’s clothing to customers of
defendants; and
(d) adhered to agreed-upon markups and retail prices for
the sale of women’s clothing to customers of defen-
dants.
Vil
Injury To Plaintiffs
As a direct and proximate result of the unlawful acts and
conduct of defendants and co-conspirators hereinabove alleg-
14
ed, plaintiff and members of the classes have suffered injury
in that they have been forced to pay substantial overcharges
in retail purchases of women’s clothing.
Vill
Fraudulent Concealment
At all times herein mentioned, the defendants and the co-
conspirators took measures to conceal from the plaintiffs and
the members of the plaintiff classes the violations hereinabove
alleged. The meetings and the exchange of markup charts
hereinabove alleged took place in an atmosphere of the
strictest secrecy, and were never revealed to anyone other than
the representatives of the defendants and the co-conspirators
who participated therein. As a result of the defendants’
fraudulent concealment of their violations, the plaintiff and
the members of the plaintiff classes were unaware of the ex-
istence of the claims alleged herein, and could not, by the ex-
ercise of reasonable diligence, have discovered the existence of
such claims, until the year 1976.
IX
Relief
Plaintiff and members of the classes seek injunctive relief
and damages. Plaintiffs and members of the classes have not
yet ascertained the precise dollar amount of said damages;
when said amount has been ascertained, plaintiff will ask
leave of court to amend this complaint to insert that amount
herein, which must be trebled as required by Section 4 of the
Clayton Act (15 U.S.C. §15).
WHEREFORE, plaintiff prays that the court adjudge, en-
join and decree as follows:
1. That this is a proper class action;
2. That defendants and co-conspirators have engaged in
an unlawful conspiracy and combination to restrain trade and
15
commerce in women’s clothing in Southern California, in-
cluding Los Angeles and Orange Counties, in violation of Sec-
tion 1 of the Sherman Act (15 U.S.C. §1);
3. That plaintiff and members of the classes have been
proximately injured by reason of one or more of the above
alleged unlawful acts;
4. That plaintiff and members of the classes recover
damages which, when ascertained, must be trebled as required
by Section 4 of the Clayton Act (15 U.S.C. §15);
5. That plaintiff and members of the classes be awarded
reasonable attorneys’ fees and costs of litigation as provided
by Section 4 of the Clayton Act;
6. That defendants, and each of them, be permanently
enjoined and restrained from each and every one of the
unlawful practices alleged in the complaint as provided by
Section 16 of the Clayton Act (15 U.S.C. §26);
7. That plaintiff and members of the classes be awarded
such other and further relief as the court may deem just and
proper.
DATED: June 10, 1976.
Law OFFICES OF JERROLD
N. OFFSTEIN
JERROLD N. OFFSTEIN
JOHN A. KITHAS
CHARLES LAMONT
SUMMERHAYS & SWOPE
LOWELL V. SUMMERHAYS
Davip M. SwopE
By: /s/ Jerrold N. Offstein
JERROLD N. OFFSTEIN
LOWELL V. SUMMERHAYS
Attorneys for Plaintiffs
16
Pursuant to rule 38, of the Federal Rules of Civil
Procedure, jury trial in the instant matter is hereby
demanded.
DaTeED: June 10, 1976.
LAW OFFICES OF JERROLD
N. OFFSTEIN
SUMMERHAYS & SWOPE
By: /s/ Jerrold N. Offstein
JERROLD N. OFFSTEIN
LOWELL V. SUMMERHAYS
Attorneys for Plaintiffs
17
UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF CALIFORNIA
Civil No. C76-1210 RHS
FLoYD Brown, individually, and on behalf of others
similarly situated,
Plaintiffs,
V.
FEDERATED DEPARTMENT STORES, INC., d/b/a I. MAGNIN &
Co., and BULLOCK’s SOUTHERN CALIFORNIA; SAKS &
CoMPANY, d/b/a SAKS FIFTH AVENUE,
Defendants.
ANSWER AND COUNTERCLAIM OF DEFENDANT
FEDERATED DEPARTMENT STORES, INC. AND JURY
TRIAL DEMAND
(Filed June 22, 1976)
Defendant Federated Department Stores, Inc., by its
attorneys, answers the complaint herein as follows:
1. Admits that plaintiff purports to institute these
proceedings and seek relief pursuant to the statutory
provisions referred to in paragraph 1. Otherwise, defendant
denies the allegations of paragraph 1.
2. Admits that agents of defendants transact business
within the Central District of California and are within the
jurisdiction of this Court for purposes of service of process.
Otherwise, defendant denies the allegations of paragraph 2.
3. Admits that plaintiff purports to bring this action for
himself and as a representative of classes for all members
thereof, but denies that this action may be properly brought
as a class action and that plaintiff is a proper representative
of any class. Defendant is without knowledge or information
sufficient to form a belief as to the truth of the allegations
18
that plaintiff is a purchaser of women’s clothing from I.
Magnin & Co., Bullock’s Southern California and Saks Fifth
Avenue. Otherewise, defendant denies the allegations of
paragraph 3.
4. Defendant is without knowledge or information suffi-
cient to form a belief as to the truth of the allegation of
paragraph II.
5. Denies that defendant Federated Department Stores,
Inc. engaged in the retailing of women’s clothing in Southern
California prior to August 29, 1964 and that it does business
under the trade name ‘‘Bullock’s Southern California.’’
Otherwise, defendant admits the allegations of the first
paragraph of paragraph III and avers that defendant is engag-
ed in the retailing of women’s clothing in Southern California
under the trade name ‘‘Bullock’s,’’ with. principal offices
located in Los Angeles, California. Upon information and
belief, defendant admits the allegations of the second
paragraph of paragraph III.
6. Denies the allegations of paragraph IV.
7. Admits that defendant’s stores sell fashionable
women’s clothing of quality and style in Southern California,
admits the first sentence of the second paragraph of
paragraph V, and admits, upon information and belief, that
some retailers have maintained and used ‘‘markup lists’’
which contain an indicated retail price for items purchased at
a given cost level. Otherwise, defendant is without knowledge
or information sufficient to form a belief as to the truth of
the allegations of paragraph V.
8. Denies the allegations of paragraph VI.
9. Denies the allegations of paragraph VII.
10. Denies the allegations of paragraph VIII and avers
that the allegations lack sufficient particularity and do not
satisfy the requirements of Rule 9(b) of the Federal Rules of
Civil Procedure.
11. Admits that plaintiff purports to seek the relief set
forth in paragraph IX. Otherwise, defendant denies the
19
allegations of paragraph IX. No responsive pleading is
required to the speculative allegation that plaintiff will seek
leave of court to amend the complaint.
Defenses
As and for additional defenses to the complaint,
defendant Federated Department Stores, Inc. states as
follows:
First Defense
12. The complaint fails to state a claim upon which relief
may be granted.
Second Defense
13. The claims of plaintiff and those whom he purports
to represent (hereinafter collectively referred to as
“‘nlaintiffs’’) are barred in whole or in part by the applicable
statute of limitations.
Third Defense
14. The claims of the plaintiffs are barred in whole or in
part by laches.
Fourth Defense
15. The complaint, and each and every claim thereof, is
not proper for treatment as a class action, by virtue of the
following factors, among others:
(a) There are no ascertainable classes;
(b) The claims of the named plaintiff are not typical of
those whom he purports to represent;
(c) The named plaintiff will not fairly and adequately
protect the interests of those whom he purports to represent;
(d) There are no sets of facts common to members of the
purported classes;
20
(e) Questions of fact peculiar to each member of the
purported classes predominate over facts, if any, which are
common to members of the purported classes;
(f) The named plaintiff is not the proper representative of
the purported classes;
(g) The named plaintiff is not interested in the subject
matter of the within action;
(h) The named plaintiff is not the real party in interest
with respect to the subject matter of the within action; and
(i) The alleged classes are not manageable.
Fifth Defense
16. Plaintiffs sustained no damage to their businesses or
property by reason of any act of defendant.
Counterclaim
17. This Court has jurisdiction over this counterclaim
under the principles of pendent jurisdiction. This counterclaim
arises under common law principles.
Parties And Offense Charged
18. Counterclaimant is a corporation organized and
existing under the laws of the State of Delaware, with
principal offices located in Cincinnati, Ohio. Counterclaimant
is engaged in retailing in Southern California under the trade
names of ‘‘I. Magnin & Co.’’ and ‘‘Bullock’s.’’
19. This counterclaim is brought against the named
plaintiff and, if they are certified to be proper classes herein,
those members of the purported classes described in
paragraph 3 of the complaint or any other certified class, who
made retail purchases from counterclaimant and failed to pay,
in whole or in part, for certain such purchases, the amounts
of which are still due, owing and unpaid (hereinafter
‘counterclaim defendants’’). Upon information and belief,
thousands of members of the purported classes are
counterclaim defendants.
21
20. Although payment has been duly demanded,
counterclaim defendants have failed to pay their indebtedness
to counterclaimant.
Damages
21. Each counterclaim defendant is liable’ to
counterclaimant for the amount due, owing and unpaid on
purchases made from counterclaimant, the full amounts of
which are presently unascertained.
Prayer For Relief
WHEREFORE, defendant and counterclaimant Federated
Department Stores, Inc. prays as follows:
1. That the complaint be dismissed with prejudice as to
the named plaintiff and all persons whom he purports to
represent;
2. That judgment be entered in favor of counterclaimant
in the amount of damages determined to have been sustained
by counterclaimant;
3. That defendant be awarded its costs of suit herein and
reasonable attorneys’ fees; and
4. That defendant be awarded such other relief as this
court may deem just and proper.
22
Jury Trial Demand
Defendant Federated Department Stores, Inc. demands
irial by jury of all issues so triable in this action.
Respectfully submitted,
ARNOLD & PORTER
ABE KRASH
JEROME I. CHAPMAN
IRVIN B. NATHAN
LAWRENCE C. MAISEL
1229 Nineteenth Street,
N.W.
Washington, D.C. 20036
(202) 872-6750
McKENNA & FITTING
PAUL FITTING
CHARLES G. MILLER
1920 Mills Tower
220 Bush Street
San Francisco, California
94104
(415) 443-0640
By: /s/ Charles G. Miller
CHARLES G. MILLER
Attorneys for Defendant-
Counterclaimant
FEDERATED DEPARTMENT
STORES, INC.
DATED: June 22, 1976
23
UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF CALIFORNIA
Civil No. C-76-1210 RHS
FLoyp Brown, individually, and on behalf of others
similarly situated,
Plaintiffs,
Ve
FEDERATED DEPARTMENT STORES, INC., d/b/a I. MAGNIN &
Co., and BULLOCK’s SOUTHERN CALIFORNIA; SAKS &
ComPANY, d/b/a SAKS FIFTH AVENUE,
Defendants.
ANSWER OF DEFENDANT SAKS & COMPANY TO
COMPLAINT
(Filed July 9, 1976)
Defendant SAKs & COMPANY (hereafter ‘‘Saks’’) answers
the Complaint herein as follows:
1. Answering Paragraph 1, Saks admits that plaintiff
purports to institute these proceedings and seck relief
pursuant to the statutory provisions set forth in said
paragraph. Except as so admitted, Saks denies the allegations
of said paragraph.
2. Answering Paragraph 2, Saks admits thai defendants
have agents for the transaction of business within the Central
District of California and are within the jurisdiction of this
Court for purposes of service of process. Except as so
admitted, Saks denies the remaining allegations of said
paragraph.
3. Answering Paragraph 3, Saks admits that plaintiff
purports to bring this action on behalf of himself and on
behalf of an alleged class of persons, but denies that this
action may be properly brought as a class action. Saks is
without knowledge or information sufficient to form a belief
24
as to the truth of the allegations that plaintiff is a purchaser
of women’s clothing from I. Magnin, Bullock’s Southern
California, and Saks Fifth Avenue. Saks denies the remaining
allegations of said paragraph.
4. Answering Paragraph II, Saks is without knowledge or
information sufficient to form a belief as to the truth of the
allegations of Paragraph II.
5. Answering Paragraph III, Saks admits the allegations
of subparagraph (b) of Paragraph III, and lacks knowiedge or
information sufficient to form a belief as to the truth of the
remaining allegations of said paragraph.
6. Answering Paragraph IV, Saks denies the allegations
of said paragraph.
7. Answering Paragraph V, Saks lacks knowledge or
information sufficient to form a belief as to the truth of the
allegations of said paragraph, except admits that Saks
specializes in the sale of merchandise, including women’s
clothing, and that it has an image recognized in the women’s
clothing industry and by the consumer of selling fashionable
women’s clothing of quality fabrics and favored styling.
8. Answering Paragraphs VI, VII, VIII, and IX, Saks
denies each and every of the allegations thereof, except admits
that plaintiff purports to seek the relief and damages
requested and that plaintiff may ask to amend his complaint
as alleged in Paragraph IX.
First Affirmative Defense
9. The Complaint fails to state a claim upon which relief
can be granted.
Second Affirmative Defense
10. The claims of plaintiff and the alleged class are
barred in whole or part by Section 4B of the Clayton Act, 15
U.S.C. §15(b), and such state statutes of limitations as may
be applicable.
25
Third Affirmative Defense
il. The Complaint is barred in whole or in part by
laches.
Fourth Affirmative Defense
12. The plaintiff and the alleged class have sustained no
damage to their business or property by reason of any act of
this defendant.
Fifth Affirmative Defense
13. The plaintiff and the alleged class lack standing to
sue with respect to the claims alleged in the Complaint.
Sixth Affirmative Defense
14. The Complaint, and each and every claim thereof, is
not proper for treatment as a class action, by virture of the
following factors, among others:
(a) There is no ascertainable class;
(b) There are questions of fact peculiar to each member
of the alleged class which predominate over facts, if any,
which may be common to members of the alleged class;
(c) The alleged class is not manageable;
(d) The plaintiff is not a proper representative of the
alleged class;
(e) The claims of plaintiff are not typical of those they
purport to represent.
Conditional Counterclaim
Defendant and counterclaimant Saks alleges the following
counterclaim against members of the purported class.
15. Saks is a corporation duly organized and existing
under the laws of the State of New York with its principal
place of business in New York, New York.
26
16. Saks is engaged in the business of selling merchandise
and services at retail to the general public.
17. The Court has not yet determined whether a class
action is to be certified in this action and, if so, which
persons shall be included in any such class. A portion of the
purported class sought to be certified by plaintiff have entered
into charge account agreements with Saks pursuant to which
they agreed to pay for merchandise and services purchased
from Saks in accordance with the terms set forth in the
agreement. Many of these charge account agreements also
provide that if a customer fails to make the required payment,
the entire outstanding balance is due and owing to Saks, and
that if Saks refers the customers accounts to an attorney for
collection, the customers will pay Saks’ attorneys fees and
court costs.
18. A significant number of the Saks charge account
customers who reside in Los Angeles and Orange Counties are
in breach of their charge account agreements with Saks
because they failed to pay Saks for their purchases of
merchandise and services from Saks in accordance with the
terms of their charge account agreements.
19. No part of such indebtedness has been paid to Saks
although payment has been duly demanded.
20. Accordingly, Saks has claims against a significant
number of the members of the purported class sought to be
certified. If a class is certified, upon determination of which
persons are in the class, this answer will be amended to the
extent required to identify the persons against whom the
claims exist and the amount of such claims.
WHEREFORE, defendant and counterclaimant Saks
prays for judgment as follows:
1. That plaintiff take nothing by his Complaint and that
the same be dismissed with prejudice;
27
2. That judgment be entered on the Counterclaim of Saks
in amounts to be determined plus reasonable attorneys’ fees;
3. For its costs of suit;
4. For such other and further relief as this Court may
deem just and proper.
DaTED: July 9, 1976.
SOLINGER & GORDON
EUGENE H. GORDON
JOHN C. GROSZ
STEINHART, GOLDBERG,
FEIGENBAUM & LADAR
JAMES T. FOUSEKIS
Davip B. ROE
By: /s/ James T. Fousekis
JAMES T. FOUSEKIS
Attorneys for Defendant
SAKS & COMPANY
29
UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF CALIFORNIA
No. C 76-1210 RHS
FLOYD BROwN, individually, and on behalf of others
similarly situated,
Plaintiffs,
Vv.
FEDERATED DEPARTMENT STORES, INC., d/b/a I.MAGNIN &
Co., and BULLOCK’s SOUTHERN CALIFORNIA; SAKS &
ComPANY, d/b/a Saks Fifth Avenue,
Defendants.
REPLY TO COUNTERCLAIM OF DEFENDANT FEDERATED
DEPARTMENT STORES, INC.
(Filed July 14, 1976)
Plaintiff Floyd Brown, individually, and on behalf of
those similarly situated, replies to the counterclaim of
defendant Federated Department Stores, Inc. herein as
follows:
1. Replying to paragraph 17, plaintiff denies that this
Court has jurisdiction over the counterclaim under the
principles of pendent jurisdiction. Plaintiff is without
knowledge or information sufficient to form a belief as to the
truth of the allegation that the counterclaim arises under
common law principles.
2. Replying to paragraph 18, plaintiff admits the
allegations of said paragraph.
3. Replying to paragraph 19, plaintiff admits that
defendant purports to bring the counterclaim against plaintiff
and against others who allegedly made retail purchases from
counterclaimant and failed to pay, otherwise plaintiff denies
the allegations of the first sentence of paragraph 19 insofar as
such allegations are directed at plaintiff, and plaintiff is
| PREVIOUS PAGE WAS BLANK }
30
without knowledge or information sufficient to form a belief
as to the truth of such allegations insofar as they are directed
at other individuals denominated ‘‘counterclaim defendants’’
by counterclaimant. Plaintiff is without knowledge or
information sufficient to form a belief as to the truth of the
allegations in the second sentence of paragraph 19, but denies
that any members of the purported classes are counterclaim
defendants.
4. Replying to paragraph 20, plaintiff is without
knowledge or information sufficient to form a belief as to the
truth of the allegations insofar as such allegations are directed
at other individuals denominated ‘‘counterclaim defendants’’
by counterclaimant. Plaintiff denies the allegations of said
paragraph insofar as they are directed at plaintiff.
5. Replying to paragraph 21, plaintiff denies that plaintiff
is liable to counterclaimant for any amounts due, owing or
unpaid on purchases made from counterclaimant. Plaintiff is
without knowledge or information sufficient to form a belief
as to the truth of the allegations insofar as such allegations
are directed at other individuals denominated ‘‘counterclaim
defendants’’ by counterclaimant.
First Affirmative Defense
6. This Court lacks subject matter jurisdiction over the
counterclaim.
Second Affirmative Defense
7. The counterclaim fails to state a claim upon which
relief can be granted.
Third Affirmative Defense
8. The claims of counterclaimant are barred in whole or
in part by the applicable statute of limitations.
Fourth Affirmative Defense
9. The counterclaim is barred in whole or in part by
laches.
31
Fifth Affirmative Defense
10. Prior to the filing of the counterclaim herein,
counterclaim defendants duly paid, satisfied, and discharged
the alleged claim of counterclaimant set forth in the
counterclaim herein by full payment to counterclaimant.
Sixth Affirmative Defense
11. At all times prior to the filing of the counterclaim
herein there existed in the retail clothing business in the City
of Los Angeles and surrounding counties in the State of
California, including Orange and Los Angeles Counties, a
well-established and well-understood custom and usage to the
effect that failure by a customer to make the required
payment for merchandise or services purchased from counter-
claimant pursuant to a charge account agreement would not
result in the entire outstanding balance becoming due and
owing, as counterclaimant well knew. Any purchases alleged
in the counterclaim were made by counterclaim defendants
with reference to and knowledge of such custom and usage.
Any failure to make payment or any delinquency in payment
by counterclaim defendants was in accordance with such
custom and usage.
Seventh Affirmative Defense
12. At all times prior to the filing of the counterclaim
herein, counterclaimant had full knowledge of any failure to
make payment or of any delinquency in payment by
counterclaim defendants, and waived its right to timely
performance by counterclaim defendants under the charge
account agreements between counterclaim defendants and
counterclaimant in that counterclaimant elected to treat the
charge account agreements as viable and binding and
thereafter accepted any late payment from counterclaim
defendants as satisfactory and full performance.
32
WHEREFORE, plaintiff and counterclaim defendants pray
for judgment as follows:
1. That counterclaimant take nothing by its counterclaim
and that the same be dismissed with prejudice;
2. That counterclaim defendants be awarded the costs of
suit herein and reasonable attorneys’ fees; and
3. That counterclaim defendants be awarded such other
relief as this Court may deem just and proper.
DaTED: July 13, 1976.
Law OFFICES OF JERROLD
N. OFFSTEIN
JERROLD N. OFFSTEIN
JOHN A. KITHAS
CHARLES LAMONT
SUMMERHAYS & SWOPE
LOWELL V. SUMMERHAYS
Davip M. Swope
By: /s/ Charles Lamont
CHARLES LAMONT
Attorneys for Plaintiff and
Counterclaim Defendants
33
UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF CALIFORNIA
No. C 76-1210 RHS
FroyD Brown, individually, and on behalf of others
similarly situated,
Plaintiffs,
V.
FEDERATED DEPARTMENT STORES, INC., d/b/a I. MAGNIN &
Co., and BULLOCK’s SOUTHERN CALIFORNIA; SAKS &
CoMPANY, d/b/a SAKS FIFTH AVENUE,
Defendants.
REPLY TO CONDITIONAL COUNTERCLAIM OF
DEFENDANT SAKS & COMPANY
(Filed July 14, 1976)
Plaintiff Floyd Brown, individually, and on behalf of
those similarly situated, replies to the conditional counterclaim
of defendant Saks & Company as follows:
1. Replying to paragraph 15, plaintiff admits the
allegations of said paragraph.
2. Replying to paragraph 16, plaintiff admits the
allegations of said paragraph.
3. Replying to paragraph 17, plaintiff admits the
allegations of the first sentence of said paragraph. Plaintiff is
without knowledge or information sufficient to form a belief
as to the truth of the remaining allegations in said paragraph.
4. Replying to paragraph 18, plaintiff is without
knowledge or information sufficient to form a belief as to the
truth of said allegations, but denies any breach by plaintiff.
5. Replying to paragraph 19, plaintiff is without
knowledge or information sufficient to form a belief as to the
truth of said allegations, but denies any indebtedness to Saks.
34
6. Replying to paragraph 20, plaintiff is without
knowledge or information sufficient to form a belief as to the
truth of the allegations in the first sentence of said paragraph.
No responsive pleading is required to the _ speculative
allegation in the second sentence of said paragraph that
defendant and counterclaimant will amend the answer if a
class is certified.
First Affirmative Defense
7. This Court lacks subject matter jurisdiction over the
counterclaim.
Second Affirmative Defense
8. The counterclaim fails to state a claim upon which
relief can be granted.
Third Affirmative Defense
9. The claims of counterclaimant are barred in whole or
in part by the applicable statute of limitations.
Fourth Affirmative Defense
10. The counterclaim is barred in whole or in part by
laches.
Fifth Affirmative Defense
11. Prior to the filing of the counterclaim herein,
counterclaim defendants duly paid, satisfied, and discharged
the alleged claim of counterclaimant set forth in the
counterclaim herein by full payment to counterclaimant.
t
Sixth Affirmative Defense
12. At all times prior to the filing of the counterclaim
herein there existed in the retail clothing business in the City
of Los Angeles and surrounding counties in the State of
California, including Orange and Los Angeles Counties, a
well-established and well-understood custom and usage to the
35
effect that failure by a customer to make the required
payment for merchandise or services purchased from
counterclaimant pursuant to a charge account agreement
would not result in the entire outstanding balance becoming
due and owing, as counterclaimant well knew. Any purchases
alleged in the counterclaim were made by counterclaim
defendants with reference to and knowledge of such custom
and usage. Any failure to make payment or any delinquency
in payment by counterclaim defendants was in accordance
with such custom and usage.
Seventh Affirmative Defense
13. At all times prior to the filing of the counterclaim
herein, counterclaimant had full knowledge of any failure to
make payment or of any delinquency in payment by
counterclaim defendants, and waived its right to timely
performance by counterclaim defendants under the charge
account agreements between counterclaim defendants and
counterclaimant in that counterclaimant elected to treat the
charge account agreements as viable and binding and
thereafter accepted any late payment from counterclaim
defendants as satisfactory and full performance.
36
WHEREFORE, plaintiff and counterclaim defendants pray
for judgment as follows:
1. That counterclaimant take nothing by its counterclaim
and that the same be dismissed with prejudice;
2. That counterclaim defendants be awarded the costs of
suit herein and reasonable attorneys’ fees; and
3. That counterclaim defendants be awarded such other
relief as this court may deem just and proper.
DATED: July 13, 1976.
Law OFFICES OF JERROLD
N. OFFSTEIN
JERROLD N. OFFSTEIN
JOHN A. KITHAS
CHARLES LAMONT
SUMMERHAYS & SWOPE
LOWELL V. SUMMERHAYS
Davip M. Swope
By: /s/ Charles Lamont
CHARLES LAMONT
Attorneys for Plaintiff and
Counterclaim Defendants
37 fa
_
UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF CALIFORNIA
No. C 76 867 SW
DONNA JEAN WEINBERG, ef ai/.,
Ww
FEDERATED DEPARTMENT STORES, INC.
No. C 76 869 SW
ELEANOR EISENBERG, ef
¥.
FEDERATED DEPARTMENT STORES,
No. C 76 1110 SW
MARILYN MOITIE,
Vv.
FEDERATED DEPARTMENT STORES,
No. C 76 1363 SW
SANDRA G. MUSSER,
Ve
FEDERATED DEPARTMENT STORES,
al.,
INC.
INC.
INC.
b
oJ
’
Plaintiffs,
et al.,
Defendants
Plaintiffs,
et al.,
Defendants.
Plaintiff,
et al.,
Defendants.
Plaintiff,
et al.,
Defendants.
38
No. C 76 1429 SW
JUNE MORGAN,
Plaintiff,
V.
FEDERATED DEPARTMENT STORES, INC., ef al.,
Defendants.
Notice Of Notion And Motion Of Defendants Federated
Department Stores, Inc. and Saks & Company To Dismiss
(Filed July 23, 1976)
To PLAINTIFFS AND To THEIR ATTORNEYS OF RECORD:
PLEASE TAKE NOotTIcE that on Thursday, September 16,
1976, at 11:00 a.m., in the Courtroom of the Honorable
Spencer Williams, 450 Golden Gate Avenue, San Francisco,
California defendants Federated Department Stores, Inc. and
Saks & Company will move the Court to dismiss the actions
herein for failure to state claims upon which relief may be
granted pursuant to Federal Rule of Civil Procedure 12(b)(6).
This motion is based upon this Notice of Motion, the
Memorandum of Points and Authorities in Support of this
39
motion served and filed herewith, the Order of this Court
filed on June 25, 1976, and all pleadings, files and records
herein.
DaTED: July 23, 1976
Respectfully submitted,
ARNOLD & PORTER
ABE KRASH
JEROME I. CHAPMAN
IRVIN B. NATHAN
LAWRENCE C. MAISEL
DouGLas J. COLTON
McKENNA & FITTING
PAUL FITTING
CHARLES G. MILLER
By: /s/ Jerome I. Chapman
JEROME I. CHAPMAN
Attorneys for Defendant
FEDERATED DEPARTMENT
STORES, INC.
STEINHART, GOLDBERG,
FEIGENBAUM & LADAR
JAMES T. FOUSEKIS
Davip B. ROE
SOLINGER & GORDON
EUGENE H. GorRDON
JOHN C. Grosz
By: /s/ James T. Fousekis
JAMES T. FOUSEKIS
Attorneys for Defendant
SAKS & COMPANY
4]
UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF CALIFORNIA
No. C 76 867 SW
DONNA JEAN WEINBERG, ef ai/.,
Plaintiffs,
Ve
FEDERATED DEPARTMENT STORES, INC., ef al.,
Defendants.
No. C 76 869 SW
ELEANOR EISENBERG, ef al.,
Plaintiffs,
Vv.
FEDERATED DEPARTMENT STORES, INC.,
Defendants.
No. C 76 1110 SW
MARILYN MOITIE,
Plaintiff,
Vv.
FEDERATED DEPARTMENT STORES, INC., ef al.,
Defendants.
_ PREVIOUS PAGE WAS BLANK |
42
No. C 76 1363 SW
SANDRA G. MUSSER,
Plaintiff,
Vv.
FEDERATED DEPARTMENT STORES, INC., ef al.,
Defendants.
No. C 76 1429 SW
JUNE MORGAN,
Plaintiff,
ws
FEDERATED DEPARTMENT STORES, INC., ef al.,
Defendants.
PLAINTIFF MARILYN MOITIE’S
MEMORANDUM IN OPPOSITION TO
DEFENDANTS’ MOTION TO DISMISS
(FILED AUG. 6, 1976)
43
TABLE OF CONTENTS
We MD oni neko owe os oven
I.
Il.
Ill.
IV.
INTRODUCTION AND STATEMENT OF ANTITRUST
WES Vuk ga et hia Set tte
NoN-COMMERCIAL OR RETAIL CONSUMERS HAVE
STANDING To SUE For TREBLE DAMAGES UNDER
SECTION 4 OF THE CLAYTON ACT.................
Hawaii AND Air Pollution Do Not Hoip Tuat ALL
CONSUMERS Must HAVE COMMERCIAL INTERESTS To
HAVE STANDING To SuE UNDER SECTION 4 OF THE
CRAVING cock occ awccecce Dy ge Sng A nes OR ae a Ran
CONSUMER PROTECTION Is ONE OF THE PuRPOSES OF
THE SHERMAN AcT AND CLAYTON ACT ANTITRUST
5 | ____ caren vaio e Bas 5 hep hata ine ti elise tae ce ne ay
AR en ae A a eel bee ev
44
TABLE OF AUTHORITIES
CASES:
Apex Hosiery Co. v. Leader, 310 U.S. 469 (1940).......
Armour & Co. v. Wantock, 323 U.S. 126 (1944) .......
Broadcasters, Inc. v. Morristown Broadcasting Corp.,
Boo Bc. GO) CEDLIN.T, TOR so cc ewcies vas
Brown v. United States, 54 F.Supp. 663 (S.D. Cal. 1941)
Chattanooga Foundry & Pipe Works v. City of Atlanta,
ee RE. DS 6 0s os WWE Chae ee eee
Cleary v. Chalk, 488 F.2d 1315 (D.C. Cir. 1973) .......
Cohens v. Virginia, 6 Wheat. 246 (1821)...............
English v. Ralph Williams Ford, 17 Cal. App. 3d 1038,
J te eT.) See tn ees
GAF Corp. v. Circle Floor Co., 463 F.2d 752 (2d Cir.
TTR Pe re Pree tn ennne
General Inv. Co. v. New York Central R.R., 271 U.S.
SI kA ree Soe Serene eer Uae ee
Goldfarb v. Virginia State Bar, 421 U.S. 773 (1975).....
Hamman vy. United States, 267 F.Supp. 420 (D.Mont.
DE Porta eCuN reds settee pee Es el cote us
Hawaii v. Standard Oil Co., 405 U.S. 251 (1972) .......
Hawaii v. Standard Oil Co., 431 F.2d 1282 (1970) ......
Hawaii v. Standard Oil Co. 301 F.Supp. 982 (D.Haw.
eae Ue Cae OLUNTL 5c abs h a < one ees <
In re Bel Air Carpets, Inc., 452 F.2d 1210 (9th Cir. 1971)
In re Hotel Telephone Charges, 500 F.2d 86
ee li te, SEO Te ep Fae ee
In re Multidistrict Vehicle Air Pollution, 1976 Trade
es ere es OE BID rv kickin nk,
In re Muitidistrict Vehicle Air Pollution, 481 F.2d 122
iene) fen ons mote ye
Kline v. Coldwell, Banker & Co., 508 F.2d 226 (9th Cir.
1974)
ic ba ec eet ee ee ee! oc a ns ee oe a ee ee ee
45
Table of Authorities (Continued)
CASES: PAGE
Martin v. Phillips Petroleum Co., 365 F.2d 629 (5th Cir.
Pe sick KAR apa ee cee cn Wak aay alee a aa
Northern Pacific Railway Co. v. United States, 356 U.S.
PEs acania conic e pts Pos eee
Roseland v. Phister Mfg. Co., 125 F.2d 417
SU a MOEN Axed N Gk ceca comes oleae
Utah Gas Pipelines Corp. v. El Paso Natural Gas Co.,
233 F.Supp. 955 (D.Utah 1964) ..................
Waldron v. British Petroleum Co., Ltd., 231 F.Supp. 72
GRE 8s PEE hh oie Ook. ook eee eee
STATUTES:
CONGRESSIONAL MATERIALS:
ee I Gs Be hh i ow kcal ies tae eee
FOO SUES 600s sah Wick aces onan ee
GRE Rs 50 o's «e's dks Seas ese eee ee
ih pe EERE EEE ete ee un EL
46
Table of Authorities (Continued)
SECONDARY SOURCES: PAGE
Brief for Appellants, Jn re Multidistrict Vehicle Air
Pollution, U.S.C.A., Ninth Circuit, No 71-1241 ....
Brief for Appellees, Jn re Multidistrict Vehicle Air Pollu-
tion, U.S.C.A., Ninth Circuit, No. 71-1241
47
I
introduction And Statement Of Antitrust Policy
To accept the premises of defendants’ motion to deny
consumers standing to sue is to ignore the very purpose of the
Sherman Act. That purpose was succinctly stated by the
Supreme Court in Apex Hosiery Co. v. Leader, 310 U.S. 469,
493 (1940):
The end sought was the prevention of restraints to free
competition in business and commercial transactions
which tended to restrict production, raise prices or other-
wise control the market fo the detriment of purchasers of
goods and services. . . . [Emphasis supplied]
But defendants do not seek to deny all consumers
standing to sue for treble damages under section 4 of the
Ciayton Act (15 U.S.C. §15).' Only non-commercial or retail
consumers are to be excluded from that remedy, purportedly
because the individual damage claim of each such consumer is
sO insignificant that its recovery would be of no real benefit
to the claimant.
Unfortunately for defendants, this Policy argument runs
afoul of 28 U.S.C. §1337 which gives the district courts
original jurisdiction of civil antitrust actions without regard to
the amount in controversy. Surely the monetary amount of an
antitrust claim cannot be the basis for differentiating between
' Section 4 provides in relevant part:
Any person who shall be injured in his business or pro-
perty by reason of anything forbidden in the antitrust laws
may sue therefor in any district court of the United States
in the district in which the defendant resides or is found or
has an agent, without respect to the amount in controver-
sy, and shall recover threefold the damages by him sus-
tained and the cost of suit, including a reasonable at-
torney’s fee. [Emphasis supplied]
48
antitrust standing for commercial consumers and retail con-
sumers. Otherwise, small commercial consumers should also
be precluded from suing for treble damages under section 4 of
the Clayton Act. The legislative history of the Sherman Act,
however, reveals the intent of Congress to permit access to the
federal courts without any jurisdictional limit as to the dollar
amount in controversy.’
The second policy argument which defendants present is
similarly without foundation. The burdens on the administra-
tion of justice arising from consumer class actions can be
checked before they become intolerable by utilizing the
manageability provisions of Rule 23 of the Federal Rules of
Civil Procedure. See Kline v. Coldwell, Banker & Co., 508
F.2d 226 (9th Cir. 1974), cert. denied, 421 U.S. 963 (1975); In
re Hotel Telephone Charges, 500 F.2d 86 (9th Cir. 1974).
Confusing questions of class action manageability with
questions of antitrust standing is presumptuous. All retail
consumer suits need not necessarily be class actions. ‘‘The
fact that a successful antitrust suit for damages recovers not
only the costs of litigation, but also attorney’s fees, should
provide no scarcity of members of the Bar to aid prospective
plaintiffs in bringing these suits.” Hawaii v. Standard Oil
Co., 405 U.S. 251, 256 (1972).
Defendants would have this Court deny antitrust standing
to all retail consumers because the opportunity to bring class
actions exists. Although such litigation has been envisioned,’
there may also be instances in which small groups of retail
consumers join together in antitrust suits for treble damages.
The benefit of recovery in their estimation may be worth the
* See discussion in section IV infra.
’**Rule 23 of the Federal Rules of Civil Procedure provides for
class actions which may enhance the efficacy of private actions by
permitting citizens to combine their limited resources to achieve a
more powerful litigation posture.’ Hawaii v. Standard Oil Co., 405
U.S. 251, 266 (1972).
49
trouble of legal action. Certainly the burden on the court
would not approach that produced by a class action. Yet these
prospective litigants would be denied standing to sue if defen-
dants’ theory were adopted, merely because the Federal Rules
of Civil Procedure make class actions available. Defendants
would have this Court unnecessarily eliminate the remedies of
certain persons in order to forestall judicial burdens which
may never be occasioned by them. The problems which attend
Rule 23 cannot be solved by tampering with antitrust
standing.
Finally, defendants argue that existing remedies are suffi-
cient. Specifically, they refer to the criminal and civil injunc-
tive actions in the arsenal of the Antitrust Division of the
Department of Justice. Although the criniinal fine for convic-
tion in antitrust cases is now one million dollars (15 U.S.C.
§1), defendants somewhat disingenuously ignore the fact they
only received fines of fifty thousand dollars each under the
former penalty provision.
Regardless of what action may be taken by the Depart-
ment of Justice, Congress, in enacting section 4 of the
Clayton Act, clearly foresaw that government action alone
would be insufficient if the injured are to be made whole
again. Even if attorneys are the main beneficiaries of private
treble damage actions, they serve as private attorneys general
to redistribute funds, in however minute shares, to those who
are legitimately entitled to participate in the recovery. Even in
these inflationary times with the erosion of the dollar’s value,
most customers at a grocery store or restaurant would not
passively submit to shortchanging. Unhappily for retail con-
sumers, price-fixing is not so readily recognizable as short-
changing. The effect, though, is the same.
There is no good reason why the consumer who bears the
economic burden of an antitrust violation should ‘‘donate’’
his overcharge to the offending violator. Yet this is precisely
that which defendants suggest because the damage to each
50
consumer is typically insignificant. Interestingly, defendants
do not propose any other use to which the undivided sum of
all overcharges could be put for the public’s benefit. That
defendants should be permitted to retain the overcharges
because of procedural difficulties is an outrage.
Recently, the Senate Judiciary Committee observed:
The economic burden of most antitrust violations is
borne by the consumer in the form of higher prices for
goods and services. Frequently, such antitrust violations
as price-fixing, group boycotts, divisions of markets, ex-
clusive dealings, tie-in arrangements, fraud on the Patent
Office, monopolization, attempts to monopolize, con-
spiracies to limit production, and other violations of the
antitrust laws, injure thousands or even millions of con-
sumers, each in relatively small amounts but often on a
continuing basis. When everyday consumer purchases are
involved (e.g., bread, dairy products, gasoline, etc.), the
individual dollar amounts are so small that, as a practical
matter, an individual antitrust law suit is out of the ques-
tion. Similarly, consumers have found little relief under
the class action provisions of the Federal Rules because
of restrictive judicial interpretations of the notice and
manageability provisions of Rule 23 and practical pro-
blems in the proof of individual consumers’ damages
under section 4 of the Clayton Act. Yet, if an antitrust
violation results in an overcharge of but 10 cents on a
relatively low-priced consumer item, and 500 million such
items are sold, the aggregate impact of the conspiracy
upon the consumers and the illegal profits of the con-
spirators are hardly insignificant — at least $50 million.
Report of the Senate Judiciary Committee, The Antitrust Im-
provements Act of 1976, S.Rep. No. 94-803, 94th Cong. 2d
Sess. 39-40 (1976).
Policy considerations dictate that retail consumers have
standing to sue under section 4 of the Clayton Act. The policy
51
that the individual should not be unfairly treated by the
federal court system because his claim may be small is a valid
one. The policy that antitrust violators should not keep the
fruits of their violation is important if the concept of justice is
not to be eroded. Both policies should be worth the judicial
effort necessary to cope with burden of an antitrust suit.
Moreover, as the following discussion of law
demonstrates, there is sound legal authority for permitting
retail consumers standing to sue for treble damages.
Non-Commercial Or Retail Consumers Have Standing To
Sue For Treble Damages Under Section 4 Of The Clayton
Act
According to defendants’ misplaced reliance on recent
Supreme Court and Ninth Circuit decisions,‘ only consumers
with commercial interests and enterprises can bring private
treble damage actions under section 4 of the Clayton Act.
Defendants’ motion requests that this Court hold contrary to
Supreme Court authority which has stood for seventy years.
Mr. Justice Holmes in Chattanooga Foundry & Pipe
Works v. City of Atlanta, 203 U.S. 390, 27 S.Ct. 65 (1906)
held that the City of Atlanta could maintain an action under
section 7 of the Sherman Act’ for a violation of the antitrust
laws where the municipality was led to purchase iron pipe at
an excessive price. He said:
The facts give rise to a cause of action under the act of
Congress. The city was a person within the meaning of §7
by the express provision of §8. /t was injured in its
* A discussion of Hawaii v. Standard Oil Co., 405 U.S. 25]
(1972) and In re Multidistrict Vehicle Air Pollution, 481 F.2d 122
(9th Cir.) cert. denied 414 U.S. 1045 (1973) follows in section Ill,
infra.
* Section 4 of the Clayton Act is a re-enactment of Section 7 of
the Sherman Act.
52
property, at least, if not in its business of furnishing
water, by being led to pay more than the worth of the
pipe. A person whose property is diminished by a pay-
ment of money wrongfully induced is injured in his
property. [Emphasis supplied]
27 S.Ct. at 66.
The Court went on to say:
There can be no doubt that Congress had power to
give an action for damages to an individual who suffers
by breach of the law.
Id.
Finally, Justice Holmes made it quite clear that to sue for
antitrust damages the injury need not impinge upon a specific
type of property. He distinguished the words of the Sherman
Act from those used in the Tennessee statute of limitations
referring to “‘injury to personal property”’:
But there is a sufficiently clear distinction between in-
juries to property and “‘injured in his business or proper-
ty’’, the latter being the language of the act of Congress.
A man is injured in his property when his property is
diminished. He would not be said to have suffered an in-
jury to his property unless the harm fell upon some ob-
ject more definite and less ideal than his total wealth. A
trademark, or a trade name, or a title, is property, and is
regarded as an object capable of injury in various ways.
But when a man is made poorer by an extravagant bill
we do not regard his wealth as a unity, or the tort, if
there is one, as directed against that unity as an object.
We do not go behind the person of the sufferer. We say
that he has been defrauded or subjected to duress, or
whatever it may be, and stop there.
Id. at 67.
The unmistakeable thrust of these remarks is that the in-
jured property for which antitrust damages are sought need
not be characterized as a specific type of property, whether
53
commercial or otherwise, but rather the fact of the overcharge
is Of primary significance. Therefore, a consumer who has
suffered an overcharge by reason of an antitrust violation has
incurred an injury to property within the meaning of the
Supreme Court’s decision in Chattanooga Foundry & Pipe.
The distinction between ‘‘business’’ and **property”’
alluded to in Chattanooga was directly addressed in Waldron
v. British Petroleum Co., Ltd., 231 F.Supp. 72 (S.D.N.Y.
1964). Referring to section 4 of the Clayton Act the court
said:
The statute explicitly uses the words ‘‘business or pro-
perty’’ in the disjunctive. Congress intended this distinc-
tion to be meaningful. The word ‘‘property’’ has wider
scope and is more extensive than the word ‘‘business’’.
Less is required to prove ‘‘property’’ than to prove
‘*business’’.
The statute does not set up a qualitative or quantitative
test to determine the existence of ‘‘property’’. Nor does
the statute contain a built-in definition.
The word “‘property”’ is, in a sense, a conclusory term,
i.e., an interest which the law protects. A determination
whether plaintiff has ‘‘property’’ involves a value judg-
ment as to whether that which plaintiff factually
possesses should be legally protected. If it be decided that
the rights, privileges and powers possessed by plaintiff
should receive judicial sanction, that conclusion would be
expressed by declaring that plaintiff possesses ‘‘proper-
ty’’.
Waldron, supra, 231 F.Supp. at 86. Accord: Martin v.
Phillips Petroleum Co., 365 F.2d 629, 634 (Sth Cir. 1966);
Utah Gas Pipelines Corp. v. El Paso Natural Gas Co., 233
F.Supp. 955, 964-965 (D.Utah 1964). The court then held that
a contract to import oil was property within the purview of
section 4. Although plaintiff had failed to demonstrate to the
court his ability to engage in the oil business and therefore
54
could show no injury to ‘‘business’’, the inherent value of the
contract entitled him to the protection afforded by section 4
of the Clayton Act. /d. at 87.
Defendants submit that both Chattanooga and Waldron
involved commercial interests or enterprises. Thus, the pur-
chase of pipe was for use in the city’s waterworks, and the
contract was one for the importation of oii for resale. Because
the property was for commercial use, defendants argue, then
it is entitled to the protection of the antitrust laws and
damage actions for violations thereof. This theory emphasizes
the use to which the property is put as the determining factor
in deciding whether its possessor has standing to sue under
section 4. Defendants cite no authority for such a proposition.
That a court should protect only a commercial consumer
and not a non-commercial consumer is contrary to Supreme
Court law. Defendants might argue that the commercial con-
sumer is in competition and the raison d’etre of the antitrust
laws is to protect and promote competition. See, e.g., GAF
Corp. v. Circle Floor Co., 463 F.2d 752, 758 (2d Cir. 1972),
cert. dismissed, 413 U.S. 901 (1973). On the other hand, the
non-commercial consumer does not utilize the product or ser-
vice in any competitive venture and therefore is not one for
whom antitrust protection was primarily designed.
This antitrust analysis, which seems to be the only plausi-
ble substantive explanation for discriminating between com-
mercial and non-commercial consumers, cannot account for
the facts of either Chattanooga Foundry & Pipe v. City of
Atlanta or Hawaii v. Standard Oil Co. \n both cases, plaintiff
was a governmental entity which had standing to sue for over-
charges on purchases made in its proprietary capacity. Chat-
fanooga, supra, 27 S.Ct. at 66; Hawaii, supra, 405 U.S. at
262. But a governmental entity such as a city or state govern-
ment, no matter what functions it undertakes on behalf of its
residents or citizens, can hardly be deemed to be in competi-
tion. Neither the City of Atlanta nor the State of Hawaii was
harmed in its competitive position in any business, whatever
the ultimate effect of the overcharges for pipe or gasoline.
55
Whether competition in some unidentified business or in-
dustry was ultimately injured by the overcharges incurred by
the governmental entity was never considered by the Supreme
Court. As Justice Holmes’ remarks in Chattanooga graphical-
ly illustrate, the question of whether the City of Atlanta was
injured in the business of furnishing water was unimportant
because the amount of the overcharge was the damage.
Justice Marshall, in Hawaii, » ipra 405 U.S. at 262, n. 14 ex-
plicitly recognized this point:
Where the injury to the State occurs in its capacity as a
consumer in the marketplace, through a ‘‘payment of
money wrongfully induced,’’ Chattanooga Foundry &
Pipe Works v. City of Atlanta, 203 U.S. 390, 396 (1906),
damages are established by the amount of the overcharge.
Under §4, courts will not go beyond the fact of this in-
jury to determine whether the victim of the overcharge
has partially recouped its loss in some other way, even
though a State, for example, may ultimately recoup some
part of the overcharge through increased taxes paid by
the seller. See Hanover Shoe, Inc. v. United Shoe
Machinery Corp. [1968 TRADE Cases $72,490], 392 U.S.
481, 489 (1968).
Clearly, if a government consumer that is not in competi-
tion (except perhaps for investment capital) may sue for an-
titrust damages for overcharges it may have ‘‘passed-on’’ to
its citizens, then certainly those citizens themselves, who can
pass on none of the overcharge, should also have standing to
sue. Defendants request this Court to deny individuals the
same rights that the Supreme Court has at least twice
recognized on behalf of governmental entities. To rule as
defendants request is to discriminate against individuals in
favor of government without any basis whatsoever. Indeed, as
already mentioned above, in denying the parens patriae count
in Hawaii, Justice Marshall observed that private citizens did
not need the government’s help to prosecute their claims. The
citizens could resort to class action procedure in order to ac-
complish a recovery without government assistance. Hawaii,
supra, 405 U.S. at 266.
56
If this Court nevertheless insists upon commercial in-
terests being present, plaintiff submits that sales and pur-
chases of women’s clothing are commercial transactions. Such
sales are transactions in goods within the scope of the Divi-
sion on Sales of the California Commercial Code:
Unless the context otherwise requires, this division ap-
plies to transactions in goods... .
Cal. Comm. Code, §2102. See English v. Ralph Williams
Ford, 17 Cal. App. 3d 1038, 1046-1047, 95 Cal. Rptr. 501
(1971). Consequently, all the rights and remedies afforded by
the Sales Division would be attendant to such transactions
between defendants and plaintiff and class members. The
defendants, for example, have a right pursuant to Cal.
Comm. Code, §2702(2) as unpaid sellers under certain cir-
cumstances to reclaim goods sold to any buyer on credit while
such buyer is insolvent. See English, supra, 17 Cal. App. 3d
at 1047; In re Bel Air Carpets, Inc., 452 F.2d 1210, 1211-1212
(9th Cir. 1971). In fact, unless defendants are engaging in
purely coercive tactics, they are interested enough in the un-
paid accounts of credit purchasers to bring counterclaims in
this litigation. Defendants are seeking to enforce their rights
in these credit transactions. Certainly plaintiff’s property is
also a commercial interest which has been directly affected by
a vidlation of the antitrust laws and should also receive
judicial sanction through the treble damage provision of sec-
tion 4 of the Clayton Act.
However, as section III, infra demonstrates, not all con-
sumers must have commercial interests to have standing to sue
for antitrust damages despite the language of Hawaii upon
which defendants rely. At least one circuit court in dictum has
SO stated.
In Cleary v. Chalk, 488 F.2d 1315 (D.C. Cir. 1973), cert.
denied, 416 U.S. 938 (1974), a farepaying passenger of a tran-
sit company brought an action on behalf of himself and
others for violation of section 10 of the Clayton Act. The
district court dismissed and the Circuit Court affirmed,
57
finding that the complained of transactions did not come
within the scope of section 10.
Although the Court did not decide the question of an-
titrust standing, it did note:
Appellees also mount a strenuous attack on appellant’s
standing to sue. The jurisdictional predicate of this suit is
§4 of the Clayton Act, which authorizes an action for tre-
ble damages by a ‘‘person . . . injured in his business or
property by reason of [conduct] forbidden in the antitrust
laws.’’ See note 3, supra. This language makes evident
three basic requirements which appellant had to satisfy in
order to achieve standing to maintain the action.
The first was sufficient allegation of injury to
‘“‘business or property’’, and those words ‘‘refer to com-
mercial interests or enterprises’’. Hawaii v. Standard Oil
Co., 405 U.S. 251, 264, 92 S.Ct. 885, 892, 31 L.Ed. 2d
184 (1972). One who in a business transaction purchases
an article is ‘‘injured in [his] property’? when he is ‘‘led
to pay more than the worth of the’’ article, Chattanooga
Foundry & Pipe Works v. Atlanta, 203 U.S. 390, 396, 27
S.Ct. 65, 66, 51 L.Ed. 241 (1906); ‘‘[a] person whose
property is diminished by a payment of money wrongful-
ly induced is injured in his property.’ /d. Accord,
Hanover Shoe, Inc. v. United Shoe Mach. Corp., 392
U.S. 481, 489-490, 88 S.Ct. 2224, 20 L.Ed. 2d 1231
(1968). We have no doubt that a consumer of service who
is illegally overcharged sustains a property injury no less
than a consumer of goods. See Hawaii v. Standard Oil
Co., supra, 405 U.S. at 262-264, 92 S.Ct. 885, Thomsen
v. Cayser, 243 U.S. 66, 88, 37 S.Ct. 353, 61 L.Ed.
Cleary, supra, 488 F.2d at 1319, n. 17.
Finally, although the issue was not presented to the
Supreme Court and therefore the decision is not precedent for
this Court, plaintiff submits that the recent case of Goldfarb
Vv. Virginia State Bar, 421 U.S. 773 (1975) is instructive. The
plaintiff in that case was a purchaser of legal services for the
58
purpose of a title examination precedent to obtaining title in-
surance and financing for the purchase of a home. Mr.
Goldfarb had no injury to commercial property, nor ap-
parently was his competitive position in any business damag-
ed. Although standing to sue is not jurisdictional, but rather
goes to the merits [see General Inv. Co. v. New York Central
R.R., 271 U.S. 228, 230 (1926)], it seems inconceivable that
the Supreme Court would not at least in passing mention that
the issue was present, even if not raised by the parties. If the
antitrust standing of consumers of legal services for non-
commercial reasons is permitted, then certainly consumers of
women’s clothing should not be denied the same remedy.
Hawaii And Air Pollution Do Not Hold That All Con-
sumers Must Have Commercial Interests To Have Standing
To Sue Under Section 4 Of The Clayton Act
In their efforts to further complicate the law of antitrust
standing which has sprung from a rather straight-forward
statute, defendants have failed to heed the admonition of Mr.
Justice Jackson regarding Supreme Court language taken out
of context:
It is timely again to remind counsel that words of our
opinions are to be read in the light of the case under
discussion. To keep opinions within reasonable bounds
precludes writing into them every limitation or variation
which might be suggested by the circumstances of cases
not before the Court. General expressions transposed to
other facts are often misleading.
Armour & Co. v. Wantock, 323 U.S. 126, 132-133 (1944).
The general expression of law which defendants contend
precludes standing by plaintiffs in these cases is part of a rul-
ing denying a state standing to sue under section 4 for injuries
to its ‘*general economy’’. Hawaii v. Standard Oil Co., 405
U.S. 251 (1972). The Court in Hawaii recognized that a state
could sue under section 4 in its proprietary capacity for treble
59
damages. /d. at 262. Thus, a state may sue as a consumer in
the marketplace for overcharges resulting from antitrust viola-
tions. /d.
Justice Marshall then proceeded to distinguish between a
state’s proprietary interests and its general economy for pur-
poses of section 4 of the Clayton Act as follows:
Like the lower courts which have considered the mean-
ing of the words ‘‘business or property’’, we conclude
that they refer to commercial interests or enterprises. See,
e.g., Roseland v. Phister Mfg. Co. (1940) — 1943
TRADE CASES 456,187), 125 F.2d 417 (CA-71942);
Hamman v. United States (1967 TRADE CASES
472,172), 267 F.Supp. 420 (Mont. 1967), appeal dismiss-
ed, 399 F.2d 673 (CA-9 1968); Broadcasters, Inc. v. Mor-
ristown Broadcasting Corp. (1960 TRADE CASES
469,847), 185 F.Supp. 641 (NJ 1960). When the State
seeks damages for injuries to its commercial interests, it
may sue under §4. But where, as here, the State seeks
damages for other injuries, it is not properly within the
Clayton Act.
Hawaii, supra, 405 U.S. at 264. Clearly, the Court was not
holding that all plaintifs must have commercial interests or
enterprises in order to sue for damages under section 4.
Rather, because the phrase ‘‘business or property”’ is a broad
one and could be construed to apply without limitation to all
aspects of a state’s economy,° the Court in Hawaii decided
that when a state is a plaintiff, it may sue under the antitrust
laws only for injuries to its commercial interests.
* Indeed, the District Court in Hawaii v. Standard Oil Co. had
held:
If the economy of a state can be injured, then that economy
is finite and can fall within a definition of the word ‘“‘proper-
ty’’, even though it does not fall within the normal, simple
definition of ‘business and property’’ under Section 4 of the
Clayton Act. 301 F.Supp. 982, 988 (D. Haw. 1969).
60
The need to limit a state’s standing to sue was perhaps
better explained by the Ninth Circuit in Hawaii v. Standard
Oil Co., 431 F.2d 1282, 1285 (1970):
An injury to the general economy of the state is not an
injury to the business or property of the state or its peo-
ple. A state can, in its proprietary capacity, engage in
business. For injury suffered in these respects a state can
recover under §4 ... But the terms ‘‘business or proper-
ty’’ are to be construed in their ordinary sense; they do
not encompass all pecuniary injury, let alone all manner
of damage felt by a community. * * * Unless the con-
cepts of business or property are expanded well beyond
traditional usage, the general economy of a region cannot
be regarded as property in possession of the residents in-
dividually or publicly. [Emphasis supplied].
The history of the Hawaii case demonstrates that the
issue concerning the courts was whether the general economy
of the State of Hawaii could be regarded as property.’ The
Ninth Circuit made clear that the general economy of a state
cannot be regarded as property. The Supreme Court reiterated
this position by defining just what interests of a state did fall
within the scope of the phrase ‘‘business or property’’. Only
the *“‘commercial interests or enterprises’ of a state can be the
basis for a treble damage suit under section 4.
Justice Marshall’s words must be read in the light of the
case under discussion. To generalize his statements into a
holding that any plaintiff without any commerical interests or
ventures can never have standing to sue under section 4 is not
warranted by the holding of the case or by the very terms of
the statute. In Hawaii the Supreme Court never questioned a
state’s standing to sue in its proprietary capacity. See 405
U.S. at 262. In other words a state may sue for those injuries
suffered in its capacity as a consumer of goods and services.
’ ““[T]he critical question is whether the injury asserted by Hawaii
in its parens patriae count is an injury to its ‘business or proper-
ty’. 405 U.S. at 261.
61
Quite clearly, however, a state purchases goods and services
only to perform the so-called ‘‘business’’ of government. A
state cannot consume goods and services for any other pur-
pose, unlike private individuals who can purchase goods and
services either for commercial reasons or for purely personal
use.
Defendants would have this Court conclude that because
a state can only consume goods and services for the function
of running the business of government, that therefore all
private treble damage plaintiffs can only sue for injuries in-
curred when they consume goods and services for commercial
use. See Defendants’ Memorandum pp. 14-15. The argument
is logically faulty. Furthermore, the opinion in Hawaii con-
travenes any such conclusion. Justice Marshall suggests:
Rule 23 of the Federal Rules of Civil Procedure provides
for class actions which may enhance the efficacy of
private actions by permitting citizens to combine their
limited resources to achieve a more powerful litigation
posture. The District Court dismissed Hawaii’s class ac-
tion only because it was unwieldly; it did not hold that a
State could never bring a class action on behalf of some
or all of its consumer citizens.
405 U.S. at 266.
Nowhere in the Hawaii opinion does the Court suggest
that only commercial consumers have standing to sue under
Section 4. The language which defendants cite must be read in
the context of the holding. When testing the standing of a
state to sue for damages under the antitrust laws, ‘‘business
Or property’ is confined to a state’s commercial interests
which arise when the state operates in the marketplace in its
proprietary capacity.
The subsequent holding of the Ninth Circuit in the case
of In re Multidistrict Vehicle Air Pollution, 481 F.2d 122 (9th
62
Cir.), cert. denied 414 U.S. 1045 (1973) follows the reasoning
of the Hawaii case. The Court held that:
[S]ince neither the government’s individual claims, nor
their class claims, nor their parens patriae claims allege
any injury to commercial ventures or enterprises, the
governmental entities cannot seek recovery under section
4 of the Clayton Act.
481 F.2d at 126.
In Air Pollution the government plaintiffs sought
damages not in any proprietary capacity, but rather for in-
juries to that which the Court in Hawaii called the **general
economy’’. The conspiracy charged was one which allegedly
eliminated competition among automobile manufacturers in
the research, development, manufacture, installation and
patenting of automotive air pollution devices. The governmen-
tal entities claimed losses resulting from the diminution in
value of, and expenditures in connection with, government
property and interests. 481 F.2d at 125. However, as the
defendants’ appellate brief in the Ninth Circuit pointed out:
The antitrust violations charged in the complaints
relate solely to the business of developing and installing
emission controls in motor vehicles. Plaintiffs do not and
cannot allege that they have had or desired to have
business transactions in this market, whether as buyers,
sellers, competitors or employees and that, as such, they
have been injured by the alleged violations.
Brief for the Appellants, In re Multidistrict Vehicle Air Pollu-
tion, United States Court of Appeals, Ninth Circuit, No.
71-1241, page 9.
Unfortunately for plaintiffs, their argument was precisely
the one rejected in Hawaii. After quoting the language of Mr.
Justice Holmes in Chattanooga Foundry & Pipe Works vy.
Atlanta, supra, their appellate brief argued:
If Atlanta was injured in its ‘‘business of furnishing
water’, California, Philadelphia, New York City, and
63
the other governmental entites that have made expen-
ditures to combat the effects of motor vehicle air pollu-
tion caused by defendants’ antitrust violation are likewise
injured in their business, i.e., the business of protecting,
preserving, and caring for the ‘‘safety, health, comfort,
and general welfare of the inhabitants of the [State or] ci-
ty and visitors thereto’’.
Brief for the Appellees, Jn re Multidistrict Vehicle Air Pollu-
tion, United States Court of Appeals, Ninth Circuit, No.
71-1241, pages 18-19. The damages which the government
plaintiffs in Air Pollution claimed were not to the
““businesses’’ of the states as defined in Hawaii, specifically
commercial interests. Consequently, the Ninth Circuit held
that these plaintiffs had no standing to sue for the alleged an-
titrust violations. Air Pollution does not hold that all non-
commercial consumers have no standing to sue under section
4 of the Clayton Act. °
Interestingly, two of the three cases which the Court in
Hawaii, supra, 405 U.S. at 264 cites for the general statement
that ‘‘business or property”? refers to commercial interests or
enterprises, do not even discuss the meaning of ‘“*property”’
which plaintiff here relies upon for standing in this case.
In Roseland v. Phister Mfg. Co., 125 F.2d 417 (7th Cir.
1942), an exclusive sales agent brought an antitrust action
against his employer and others, alleging that they combined
and conspired to suppress competition in fire prevention
equipment, thereby depriving plaintiff of an opportunity to
bid and make sales in certain territories. The court held that
plaintiff had a ‘‘business’’ which had been damaged. Defen-
dants’ argument that the ‘‘business’’ was theirs rather than
plaintiff’s was rejected.
[T]he selling of merchandise by [plaintiff] under ex-
clusive sales contracts constitutes his business. We may
not by what seems to us a strained and unjustified limita-
tion bar plaintiff from the Statutory remedy. ‘‘Congress
evidently foresaw the wholesome effect of pecuniary
64
responsibility for injuries resulting from such forbidden
combinations and the courts should not devitalize the
remedy by strained interpretations calculated to en-
courage disregard of the law’’. Chattanooga Foundry &
Pipe Works v. City of Atlanta, 203 U.S. 390, 27 S.Ct.
65, 51 L.Ed. [Emphasis supplied]
Roseland, supra, 125 F.2d at 420. This case can hardly be
authority for the proposition that section 4 of the Clayton Act
should be read more narrowly.
Neither does Broadcasters, Inc. v. Morristown Broad-
casting Corp., 185 F.Supp. 641 (D.N.J. 1960) shed any light
on the question of the meaning of ‘“‘property’’ for purposes of
section 4. In Broadcasters plaintiffs who had made an ap-
plication to the FCC for permission to construct a radio sta-
tion were held to be not injured in their business or property:
The plaintiffs were not engaged in a commercial ven-
ture or enterprise at the time this suit was brought; they
entertained nothing more than an expectation that they
would be so engaged if the license were granted.
Broadcasters, supra, 185 F.Supp. at 644. Plaintiff in the in-
stant case has more than a mere expectation. Consumer tran-
sactions have transpired involving tangible goods.
The third case which the Court in Hawaii cites is most
relative to the question at issue in this case. In Hamman v.
United States, 267 F.Supp. 420 (D.Mont. 1967), appeal
dismissed, 399 F.2d 673 (9th Cir. 1968), plaintiff survivors
alleged that an illegal conspiracy among defendant contractors
doing business as joint venturers in the construction of a dam
prevented safe construction companies from bidding for the
job. This, plaintiffs contended, resulted in a lack of job safety
which was the cause of the decedent workmen’s deaths,
thereby injuring plaintiffs with loss of consortium, a property
right in Montana. The court held, inter alia, that:
Nor is the allegation of an injury to ‘‘property”’ suffi-
cient to permit recovery under the Sherman and Clayton
Acts. ‘‘The term ‘business or property’ is used in the or-
65
dinary sense and denotes a commercial venture or enter-
prise’. Broadcasters, Inc. v. Morristown Broadcasting
Corp., N.D. 1960, 185 F.Supp. 641, 644, and cases there
cited. Although plaintiff correctly cites Waldron v.
British Petroleum Co., supra, for the principle that
‘“property’’ is a much broader term than ‘‘business’’, yet
that case also holds that it must be a type of property
that is legally protected. While it may be true that the
right of consortium is a ‘‘property”’ right in Montana, in
no case has it been held that the antitrust laws were in-
tended to protect a property right of this nature.
Hamman, supra, 267 F.Supp at 432. The Hamman case is far
different from the case sub judice. The antitrust laws are
designed to promote price competition. As Mr. Justice Black
said in Northern Pacific Railway Co. v. United States, 356
U.S. 1, 4 (1958):
The Sherman Act was designed to be a comprehensive
charter of economic liberty aimed at preserving free and
unfettered competition as the rule of trade. It rests on the
premise that the unrestrainted interaction of competitive
forces will yield the best allocation of our economic
resources, the lowest prices, the highest quality and the
greatest material progress... .
Plaintiff consumers of women’s clothing are no less entitled
to the benefits of competition than commercial consumers. In-
deed, as the following discussion of legislative history of the
Sherman Act indicates, end consumers such as plaintiff in this
case typically bear the brunt of any restraint on competition.
In a sense, the private consumers of the United States have
become a ‘‘deep pocket’’ for American businesses engaging in
anticompetitive conduct at all levels of industry. To preclude
them from treble damage actions is entirely contrary to the
protective purpose of the Sherman Act.
66
IV
Consumer Protection Is One Of The Purposes Of The Sher-
man Act And Clayton Act Antitrust Legislation
The lack of legislative discussion regarding the phrase
“business or property’’ implies that Congress intended this
disjunctive expression to mean exactly what it says. Nowhere
in the legislative history of the Sherman or Clayton Acts is
there any suggestion that the word “‘property’’ ought to te
limited to property utilized in a business. Neither does the
grammatical structure of the phrase ‘‘business or property”’
permit any such interpretation. The linguistic form created by
the use of the word ‘‘or’’ has always articulated a choice bet-
ween that preceding and that following the conjunction. Ac-
cordingly the phrase ‘‘business or property’’ means either one
or the other.
Furthermore, nowhere in the Congressional debates is
there any indication that the persons whose “‘property”’ is to
be protected by the antitrust laws should not include con-
sumers. One of the first criticisms of Senator Sherman’s bill
when first introduced was its apparent inability to protect ade-
quately the overcharged consumer. In commenting upon sec-
tion 2 of the original bill which afforded a cause of action to
‘‘any person or corporation injured or damnified’’,* Senator
George said:
This right of action against the persons in the combina-
tion is given to the party damnified. Who is this party in-
* Section 2 of the bill originally introduced by Senator Sherman
on December 4, 1889 as S.1, SIst Cong., Ist Sess. provided as
follows:
That any person or corporation injured or damnified by such
arrangement, contract, agreement, trust, or combination may
sue for and recover, in any court of the United States of com-
petent jurisdiction of any Person or corporation a party to a
combination described in the first section of this act, the full
consideration or sum paid by him for any goods, wares and
merchandise included in or advanced in price by said combina-
tion.
21 Cong. Rec. 1765 (1890).
67
jured, when, as prescribed in the bill, there has been an
advance in the price by the combination? The answer is
found in the bill itself in the words, ‘‘intended to advance
the cost to the consumer of any such articles.’’ The con-
sumer is the party ‘‘damnified or injured.’’
This is the express provision of the bill, as I think is
clear from the last clause of the first section. But even if
it were not the express language of the bill, it so results
as a logical necessity. An advance in price to the mid-
dlemen is not mentioned in the bill, for the obvious
reason that no such advance would damnify them; it
would rather be a benefit, as it would increase the value
of the goods he has on hand. He buys to sell again. He
buys only for profit on a subsequent sale. So whatever he
pays he receives when he sells, together with a profit on
his investment; and so of all of them, including the last,
who sells directly to the consumer. The consumer,
therefore, paying all the increased price advanced by the
middlemen and profits on the same, is the party
necessarily damnified or injured.
Who are the consumers? The people of the United
States as individuals; whatever each individual consumes,
or his family, marks the amount of his interest in the
price advanced by the Brana It is manifest that in
nearly every instance the damage by the advanced price
of each article affected by these combinations would be
— though in the aggregate large, indeed — so small as
not to justify the expense and trouble of a suit in a dis-
tant court. The consumer claims a loss of say, $25, on a
particular article, as sugar, affected by the combination.
If he succeeds he gets double damages; that is, $50. He
may live in Missouri, or Texas, or Kansas; he must go to
New York, or Boston or Chicago, or some distant city to
bring his suit. He is poor, a farmer, or mechanic, or
laborer. He undertakes to get damages from a powerful
and rich corporation, or combination of corporations and
persons. He must employ lawyers; he must hunt up and
68
interview witnesses, many of them unwilling to com-
municate what they know and some interested in
misleading him. He must summon them; pay their ex-
penses. He must attend the court. If he is ready for trial
the cause will be probably continued. The result will be in
nearly every case that, crushed by the expense, wearied
by the delays, he will abandon the suit in despair. [Em-
phasis supplied]
I do not hesitate to say that few, if any, of such suits
will ever be instituted, and not one will ever be suc-
cessful.
21 Cong. Rec. 1767-1768 (1890).
Senator Sherman acknowledged the difficulties of bring-
ing suit against large and powerful combinations, and express-
ed his doubt that an adequate remedy was provided for the
‘single individual whose bread has been advanced in price
and whose small expenditures have been somewhat increas-
ed’’. 21 Cong. Rec. 2569 (1890). However, the author of the
original bill also remarked as follows about the private right
of action in section 2:
1 think myself the rule of damages is too small. It pro-
vides double the damages and reasonable attorneys’ fees.’
Very few actions will probably be brought, but the cases
that will be brought will be by men of spirit, who will
contest against these combinations.
21 Cong. Rec. 2569 (1890). What was clearly contemplated by
* The original bill had been amended to provide:
Sec. 2. That any person or corporation injured or
damnified by such arrangement, contract, agreement,
trust, Or combination defined in the first section of
this act may sue for and recover, in any court of the
United States of competent jurisdiction, without
respect to the amount involved, of any person or cor-
poration a party to a combination described in the
first section of this act, twice the amount of damages
sustained and the costs of the suit, together with a
reasonable attorney’s fee.
See, 21 Cong. Rec. 2155 (1980).
69
Senator Sherman was that the incentive to ordinary citizens to
prosecute and obtain a civil remedy for damages was not
sufficient.
The mere recognition of the difficulties inherent in
private litigation by an individual consumer against a power-
ful corporation cannot be construed, as defendants suggest, as
an intention to preclude the individual consumer from any
remedy whatsoever. Senator Coke was also concerned that the
consumer would be left without an adequate remedy. Defen-
dants have cited his remarks in part at page 25 of their
Memorandum. A more complete quotation places those
remarks in the proper perspective:
How would a citizen who has been plundered in his
family consumption of sugar by the sugar trust, or in his
consumption of cotton-bagging under the trust coverning
that indispensable article, or in his consumption of iron
or steel by the iron and steel trust recover his damages
under that clause? It is simply an impossible remedy of-
fered him. The bill is as vague as the world. [Emphasis
supplied]
I do not believe that a recovery can be had under it. It
is a wasp without a sting; it is a law without a clause for
its enforcement. If the party damnified, as has been said
heretofore in this debate, were a great corporation, a
wealthy association, it could employ lawyers and perhaps
be able to show some direct damage, but how could the
consumers of the articles produced by these trusts, the
great mass of our people — the individuals — go about
showing the damages they had suffered? [Emphasis
supplied].
How would they establish the damage which they had
sustianed so as to get a judgment under this bill? I do not
believe they could do it. | do not believe it is possible to
do it. I think the constituents of all of us, the consumers
of products which are raised and manufactured in this
country, would be absolutely without a remedy under the
bill of the Senator from Ohio.
70
21 Cong. Rec. 2615 (1890). Clearly the discussion centered
around the adequacy of the remedy afforded consumers and
not the existence of such remedy which was expressly given to
any person injured.
The bill was substantially amended by the Judiciary Com-
mittee, at which time the phrase ‘‘business or property’’ was
inserted into Section 7, the new civil remedy provision. The
ensuing debate never focused on this phrase. Indeed, much of
the debate concerned the amount in controversy as a jurisdic-
tional limit, and whether State courts ought to have concur-
rent jurisdiction over antitrust suits. Senator Reagan expressed
his concern as follows:
The Senator from Vermont suggests that the bill is in
the line which I have in view, of extending the law so as
to put it within the reach of everybody by waiving the
$2,000 limit, which fixes the jurisdiction of the circuit
courts. The Senator certainly is right in that, and I feel
gratified that the Committee on the Judiciary have put
the clause into the section providing that these suits may
be there prosecuted without respect to the amount in
controversy.
That, however — and I call the attention of the
Senator from Vermont to it — is not the point that I
presented as a reason for the amendment which | offered.
The difficulty is in getting into the circuit court of the
United States. Take any one of the great States of this
country, especially those miost sparsely settled; the
litigants may in many cases be very far removed from the
place of holding the circuit court and may be unable and
would, if only a few hundred dollars were involved, be
unable to employ counsel and go to the place where the
court sits and bring suit and take witnesses and prosecute
the claim. So, then, even with the provision as submitted
by the Judiciary Committee and the words ‘‘without
reference to the amount involved’’ inserted, still, the
distance from the court and the expense of employing at-
71
iorneys in that court would be involved, and justice
would be denied to the great mass of the people under
the bill as it is presented. [Emphasis supplied]
21 Cong. Rec. 3149 (1890). Mr. Edmunds, the Senator from
Vermont and a member of the Committee on the Judiciary,
replied:
I repeat that this section was intended by the Commit-
tee on the Judiciary to allow anybody who wished, to sue
in a court of the United States without regard to the
$2,000 limitation, leaving to any man the original right to
sue anybody that offended him in the courts of his own
State and in the courts of his own county.
21 Cong. Rec. 3149 (1890).
Senator George was also concerned about the small
claimant and offered as an amendment a kind of precursor to
class action suits which would permit such individuals to unite
in the same suit against the large defendants. In support of
his amendment he argued:
It is very well to talk about the symmetry of the work
of the Judiciary Committee, but when you pass a bill by
which you throw the poor unlettered and unskilled
American farmer and American mechanic and American
laborer, who are the great sufferers by these trusts and
combinations, unaided, single-handed, against these large
corporations, you must simply pass a bill that will
amount to nothing, and / predict — and I put it on the
record now as my deliberate judgment — that not one
suit will ever be brought under this seventh section by
any person who is simply damaged in his character as
consumer, I repeat it. | do not propose silently to sit here
and be a silent partner, an assenting partner, to the
enaciment of what I know to be, so far as a remedy to
the real parties injured by these trusts is concerned, a
sham, a snare, and a delusion. [Emphasis supplied]
* * *
72
If some great manufacturer has been injured by an ad-
vance in the price of his raw material he can sue, but the
poor man, the consumer, the laborer, the farmer, the
mechanics, the country merchant, all that large class of
American citizens who constitute 90 per cent of our
population and who are the real sufferers will have no
opportunity of redress, and the bill, so far as they are
concerned, will be a snare and a mere delusion.
21 Cong. Rec. 3150 (1890). Evidently, Congress was satisfied
with the language of section 7 of the bill and rejected Senator
George’s proffered amendment. Rather than rejecting the in-
tent that the Sherman Act afford a private civil remedy to
consumers, the Congress believed that such a remedy existed
within the language of the bill as it then stood. The following
colloquy between Senator Edmunds and Senator Morgan
reflects that understanding:
Mr. Epmunps. If my friend from Alabama will allow
me, I wish to add that the framework of this bill pro-
vides, first, for a declaration of the illegality of these
things; it provides, second, for the criminal punishment
of the parties engaged in that illegal combination; it pro-
vides, third, for an institution of a suit on the part of the
United States to repress it as you suppress a nuisance,
althought it is liable to indictment; it provides, fourth,
that, on the part of the United States defending all small
people, any part of the property which is the subject of
this combination that is moved from State to State (that
is as [ar as we can go, as everybody knows) shall be an il-
legai movement and subject to confiscation. Then we say
that anybody, without respect to the amount in con-
troversy, may bring suit in the circuit court.
Mr. MorGan. I should have been perfectly satisfied
with this bill, or the first three propositions of it, as a bill
that would cover the evil, but we have gone further and
given a personal remedy, to whoever may be injured in
his business or property by the unlawful act defined and
denounced in the statute. [Emphasis supplied]
73
21 Cong. Rec. 3149 (1890).
Section 7 of the Sherman Act was thus enacted with the
intent that anyone, including consumers, would be afforded a
civil remedy for damages for violations of the Act without
regard to the amount in controversy. Subsequent reenactment
of this section as section 4 of the Clayton Act did not alter
this intent. As Congressman Floyd of the House Judiciary
Committee said regarding section 4 (at that time number Sec-
tion 5) in the House debates:
Section 5 is simply a reenactment of the provisions of
Section 7 of the Sherman law, so as to make it applicable
to the provisions of this bill.
51 Cong. Rec. 9164 (1914).
In describing what the antitrust legislators sought to ac-
complish, the Supreme Court in Apex Hosiery Co. v. Leader,
310 U.S. 469, 498 (1940) confirmed the intent of Congress to
protect all consumers:
In seeking more effective protection of the public from
the growing evils of restraints on the competitive system
effected by the concentrated commercial power of
“‘trusts’’ and ‘‘combinations’’ at the close of the nine-
teenth century, the legislators found ready at their hand
the common law concept of illegal restraints of trade or
commerce. In enacting the Sherman law they took over
that concept by condemning such restraints wherever they
occur in or affect commerce between the states. They ex-
tended the condemnation of the statute to restraints ef-
fected by a combination in the form of trust or other-
wise, Or conspiracy, as well as by contract or agreement,
having those effects on the competitive system and on
purchasers and consumers of goods or services which
were characteristic of restraints deemed illegal at common
law, and they gave both private and public remedies for
the injuries flowing from such restraints.
Defendants by this motion are attempting to erect further bar-
riers for consumer antitrust plaintiffs. Such an attempt
justifies the fears raised by the senators in 1890.
74
V
Conclusion
Although plaintiff does not dispute defendants’ motion
to dismiss the claim for injunctive relief,'® plaintiff strenuous-
ly contests standing to sue for damages. The motion to
dismiss is constructed upon statements of law made in a case
deciding a different issue than the one presented to this
Court. The Hawaii case cannot be construed to have overrul-
ed the decision in Chattanooga. An assumption of overruling
by implication is not favored. See Brown v. United States, 54
F.Supp. 663 (S.D. Cal.) 1941). As the Court in Hawaii itself
indicated, Chattanooga is still good law.
Defendants have disregarded the maxim that:
[G]eneral expressions, in every opinion, are to be taken
in connection with the case in which those expressions are
used. If they go beyond the case, they may be respected,
but ought not to control the judgment in a subsequent
suit, when the very point is presented for decision. The
reason for this maxim is obvious. The question actually
before the court is investigated with care and considered
in its full extent. Other principles which may serve to il-
lustrate it, are considered in their relation to the case
decided, but their possible bearing on all other cases is
seldom completely investigated.
Cohens v. Virginia, 6 Wheat. 264, 399-400 (1821).
'° The recent decision in /n re Multidistrict Vehicle Air Pollution,
1976 Trade Cas. 460,945 (9th Cir. 1976) governs this issue.
75
For the foregoing reasons, plaintiff submits that the
language in Chattanooga is controlling in this case and that
defendants’ motion to dismiss for lack of standing to sue for
damages should be denied.
DATED: August 6, 1976.
Respectfully submitted,
LAW OFFICES OF JERROLD
N. OFFSTEIN
JERROLD N. OFFSTEIN
JOHN A. KITHAS
CHARLES LAMONT
By Charles Lamont
CHARLES LAMONT
ATTORNEYS FOR PLAINTIFFS
77
IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF CALIFORNIA
NO. C-76-867 SW
DONNA JEAN WEINBERG, ef ai.,
Plaintiffs,
Vv.
FEDERATED DEPARTMENT STORES, INC., ef al.,
Defendants.
NO. C-76-869 SW
ELEANOR EISENBERG, ef ai.,
Plaintiffs,
V.
FEDERATED DEPARTMENT STORES, INC., ef al.,
Defendants.
NO. C-76-1110 SW
MARILYN MOITIE,
Plaintiff,
Vv.
FEDERATED DEPARTMENT STORES, INC., ef al.,
Defendants.
NO. C-76-1363 SW
SANDRA G. MUSSER,
Plaintiff,
¥.
FEDERATED DEPARTMENT STORES, INcC., et al.,
Defendants.
_ PREVIOUS PAGE WAS BLANK
78
NO. C-76-1429 SW
JUNE MorGan,
Plaintiff,
Vv.
FEDERATED DEPARTMENT STORES, INc., et al.,
Defendants.
—
MEMORANDUM ORDER
(Filed January 11, 1977)
The defendants in these actions are Federated Depart-
ment Stores, Inc., d/b/a I. Magnin & Co., and Saks & Com-
pany, d/b/a Saks Fifth Avenue. They are engaged in the
business of selling merchandise, including women’s clothing,
to the general public at retail prices through retail stores
located in Northern California and elsewhere. The plaintiffs
in all of these cases are individual members of the general
public who allege that they purchased women’s clothing at
retail from one or both of the defendants. The plaintiffs
allege representation of overlapping classes of retail pur-
chasers.' These actions parallel an indictment and civil com-
‘The alleged classes are defined in the various complaints as
follows:
Weinberg — All persons who purchased women’s clothing at retail
prices from defendants in Northern California during
the period from as early as 1963 until at least April,
1974;
Eisenberg — All individuals, corporations or other entities who
have made retail purchases of women’s clothing from
one or both of the defendants in Northern California
at any time from 1963 to the filing of the complaint;
Moitie — All persons residing in Santa Clara and San Mateo
counties who, from 1963 to the present, made retail
purchases of women’s clothing (i) from I. Magnin on
a charge basis, (ii) from I. Magnin on a check or cash
basis, (iii) from Bullock’s Northern California (a
separate Federated division from I. Magnin) on a
charge basis, (iv) from Bullock’s Northern California
79
plaint filed in this court by the United States on April 28,
1976. (See United States v. Federated Department Stores,
Inc., et al., Civil Number C-76-858-RHS, and
CR-76-236-SAW.) The government antitrust action charged
that I. Magnin and Saks had agreed to fix the retail prices of
women’s clothing sold by them to the general public in
Northern California during the period from early 1963 until
April 1974. The civil complaints in this action allege that the
plaintiffs were the victims of prices artificially maintained at
high levels in violation of the antitrust laws of the United
States.
Section 4 of the Clayton Act, 15 U.S.C. §15, which
would provide plaintiffs with their remedy in damages, reads:
Any person who shall be injured in his business or pro-
perty by reason of anything forbidden in the antitrust
laws may sue therefor in any district court of the United
States in the district in which the defendant resides or is
found or has an agent without respect to the amount in
controversy, and shall recover threefold the damages by
him sustained, and the cost of suit, including a
reasonable attorney’s fee.
To maintain this action, plaintiffs must, under the
language of section 4, have suffered an injury to their
business or property interest. The parties in this action have
briefed defendants’ motion to dismiss for lack of standing,
focusing on the issue of the nature of plaintiffs’ business or
property interest which has been allegedly injured.
on a check or cash basis, (v) from Saks on a charge
basis, and (vi) from Saks on a check or cash basis;
Musser — All persons in Northern California who purchased
women’s clothing, on charge accounts, from one or
both defendants from as early as 1963 until at least
April, 1974;
Morgan —_ All charge customers who bought women’s clothing
with an aggregate sales value of $250 or more since
January 1963 from, and whose names appeared as of
March 31, 1974 on the charge account list kept by (i)
I. Magnin, (ii) Bullock’s Northern California and (iii)
Saks.
80
Legislative History
The antitrust act which was passed in 1890 was meant to
protect competition and to thwart the takeover of small
businesses by the growing number of ruthless financiers who,
at that time, were gaining control over the economy of the
country. The Sherman Act of 1890 originally provided relief?
for “‘any person ... injured or damnified.’’ See Cong. Rec.
1765 (1890). This language, changed in the version reported
out of committee by the Judiciary Committee of the Senate,
provided treble damages for injuries to a person’s ‘‘business
or property’, and that version was enacted into law. See 21
Cong. Rec. 2901 (1890); Sherman Act of 1890, ch. 647, § 7,
26 Stat. 209. By adding the requirement that the injury must
be to a person’s business or property interest, Congress nar-
rowed the field of those who could sue to recover for an in-
jury caused by antitrust violations. In other words, a plaintiff
must show more than a mere injury. As Senator Morgan
stated,
This bill ought not to be a breeder of lawsuits. If there is
any one duty we have got higher than another in respect
of the general judiciary of the United States, it is to sup-
press litigation and have justice done without litigation as
far as we can. ... [21 Cong. Rec. 3149 (1890).]
Only by drawing a line at a business or property interest could
the proliferation of lawsuits feared by the Congress be
* There is much confusion in the legislative history as to when the
language relating to treble damages was added. The Senators in of-
fice at the time were themselves confused. Senator George, in an at-
tempt to set the record straight, discussed several versions of the
bill, quoting from the record, to show his colleagues which versions
and which subtle changes, were introduced at what Stages. See 21
Cong. Rec. 2597-2600 (1890). The original bill (Sherman’s, in-
troduced August 14, 1888) provided for full recovery, as did the se-
cond (of September 11, 1888), the third (of January 25, 1889), and
the fourth, a composite of the second and third (introduced in
December, 1889). The Finance Committee version, of January 14,
1890, provided for double recovery. The version reported out by
the Judiciary Committee includes the treble damage provision. 21
Cong. Rec. 2901. The latter is the version approved by the Senate.
21 Cong. Rec. 3145 (1890).
81
prevented. And the meaning of that phrase is the sole issue
presented in this motion to dismiss. If the plaintiffs were in-
jured in their business or property they have standing to sue
for treble damages. If not, they don’t.’
A review of the Congressional Record permits some il-
lumination on congressional intent, but much room for
disagreement persists. However, numerous references do in-
dicate that in 1890 Congress was well aware of the fact that
the new law would afford no remedy for the average con-
sumer. See 21 Cong. Rec. 2569 (1890) (Sen. Sherman); /d. at
2610 (Sen. Morgan); /d. at 2615 (Sen. Coke); /d. at 3150
(Sen. George).
Senator Sherman, the author of the Original bill, stated to
the Senate that,
In the case of a single individual whose bread has been
advanced in price or whose small expenditures have been
somewhat increased, there is no remedy for him. The
remedy is only for those who are largely enough in-
terested to sue... . [21 Cong. Rec. 2569 (1890).}
The Clayton Act additions, in 1914, Strengthened the remedy
for the small businessmen for whom litigation was difficult
under the original act. Clayton provided not only the treble
damage remedy of the Sherman Act, but permitted the person
injured to seek injunctive relief and, as well, to introduce
judgments obtained by the government as conclusive evidence
of antitrust violations. See 5] Cong. Rec. 9270 (1914). In
Outlining the major portions of the Clayton Act to fellow
members of the House of Representatives, Representative
Webb of the House Judiciary Committee claimed that the
purpose of the Clayton Act, specifically section 4 <then sec-
tion 5), was to give
‘There is no question that the plaintiffs are the targets of the
alleged price fixing activities of the department store defendants.
See In re Western Liquid Asphalt Cases, 487 F.2d 191, 198-99 (9th
Cir. 1973), cert. denied, 415 U.S. 919 (1974),
82
any person who may be injured in his business, by reason
of anything forbidden in the antitrust laws, the right to
... recover threefold the damages sustained.... [51
Cong. Rec. 9073 (1914) .]
More specifically, Representative Carlin asserted,
We went further in our effort to help the individual. We
said, “‘When you have been damaged in your business by
a coinbination operating in restraint of trade we are go-
ing to put you no louger to the expense of gathering the
testimony and of combatting the wealth of the world in
order to recover your damages. [51 Cong. Rec. 9270
(1914) (emphasis added).]
That the business or property \language was meant to encom-
pass injuries to businesses rather than to individuals is also
evident from the preoccupation of members of congress with
providing remedies for the injured businessman. For example,
Representative Taggart told the House,
A great many suits have been brought against trusts by
the United States and many trusts have been dissolved.
Some few have been punished, but the people whose
business they destroyed have been practically without
remedy. When this bill becomes a law, the person who
willfully destroys another person’s business will do so at
his peril... .
The bill is framed for the purpose of liberating business
and not for the purpose of injuring or destroying any
business. Its great purpose is to protect small business
from big business, ... . [S1 Cong. Rec. 9198 (1914) (em-
phasis added). ]
And the Senate was equally preoccupied with the need to
enlist the injured businessmen in the attack on antitrust viola-
tions. Senator Reed noted:
It follows that the Argus eyes of thousands of
businessmen now being injured will be upon the powerful
concerns, and the thousand arms of the courts will be
employed to prevent ... evil practices. [51 Cong. Rec.
12939 (1914).]
83
Judicial Construction
The courts that have addressed the question directly have
uniformly interpreted congressional intent as requiring a com-
mercial nexus. The ninth circuit has adopted a measured
approach.
[CJourts have impressed a standing doctrine so as to con-
fine the availability of section 4 relief only to those in-
dividuals whose protection is the fundamental purpose of
the antitrust laws. Cf. Barlow v. Collins, 397 U.S. 159
. . » (1970); Association of Data Processing v. Camp, 397
U.S. 150 . . . (1970); Mount Clemens Industries, Inc. v.
Bell, 464 F.2d 339, 341-344 (9th Cir. 1972). Unfortunate-
ly, no “bright line’’ has yet emerged to divine this group,
and courts have formulated varied definitions. [Jn re
Multidistrict Vehicle Air Pollution, 481 F.2d 122, 125
(9th Cir.), cert. denied, 414 U.S. 1045 (1973), reh.
denied, 414 U.S. 1148 {1974).]
The Vehicle Air Pollution court then criticized the lower
court’s expansive reading of section 4’s coverage. The
language of section 4, and the judicial constructions of stan-
ding thereunder had, the circuit asserted, keyed on the phrases
business or property and by reason of as indicating twin re-
quisites for standing.‘
The first of these twin requisites for standing, the phrase
business or property, is ‘‘a term definitively limited to in-
terests in commercial ventures or enterprises.’’ Vehicle Air
Pollution, supra, 481 F.2d at 126. The state of California, su-
ing for individual injury to itself, as a class representative and
also in parens patriae was held to lack Standing since none of
its claims alleged any injury to commercial ventures or enter-
prises. /d. The contrasting claims of farmers whose crop yield
was diminished because of the failure to develop adequate
* In this action, the phrase business or property is the only one
which is in issue. Plaintiff’s injury, whatever interest it is, is within
the target area of defendants’ activities.
84
pollution control devices were sufficient to allege injury to a
commercial interest. These farmers, however, were found to
lack standing when the target area test was applied.
The Supreme Court has agreed. In Hawaii v. Standard
Oil Co., 405 U.S. 251 (1972), the state of Hawaii sued for an
injury to itself as the purchaser of overpriced petroleum pro-
ducts (405 U.S. at 253), and also as both parens patriae for
overcharges paid by citizens and as a class representative of
all purchasers in Hawaii. The Supreme Court did not allow
Hawaii to sue as parens patriae, since,
A large and ultimately indeterminable part of the injury
to the ‘‘general economy,’’ as it is measured by
economists, is no more than a reflection of injuries to the
“business or property’? of consumers, for which they
may recover themselves under § 4. Even the most lengthy
and expensive trial could not, in the final analysis, cope
with the problems of double recovery inherent in allowing
damages for harm both to the economic interests of in-
dividuals and for the quasi-sovereign interests of the
State. (405 U.S. at 264.)
The Supreme Court permitted Hawaii to sue for the injury to
itself, because it was injured in its proprietary interest. And,
[l]ike the lower courts that have considered the meaning
of the words ‘‘business or property,’’ we conclude that
they refer to commercial interests or enterprises. See,
e.g., Roseland v. Phister Mfg. Co., 125 F.2d 417 (CA7
1942); Hamman vy. United States, 267 F. Supp. 420
(Mont. 1967), appeal dismissed, 399 F.2d 673 (CA9
1968); Broadcasters, Inc. v. Morristown Broadcasting
Corp., 185 F. Supp. 641 (NJ 1960). (405 U.S. at 264.)
In view of the foregoing, it is apparent that consumers
not claiming injury to any business or commercial interest
lack standing to maintain an antitrust action for their injuries.
The phrase business or property cannot be read to encompass
injuries to pure business interests and also to pure property
interests, in the disjunctive. The phrase is a conjunctive
reference to interests of a business nature.
85
The eighth circuit has adopted the same interpretation of
the standing requirement inherent in the business or property
term. The district court in Arkansas’ eastern district, affirmed
strongly by the eighth circuit,’ accurately interpreted the
business or property phrase of section 4 of the Clayton Act:
plaintiffs . . . must also show that they have been injured
in their ‘‘business or property’’ as that phrase is used in
Section 4 of the Clayton Act. The Supreme Court of the
United States has emphasized that in determining who
may sue under the antitrust laws, the central inquiry is
one of competitive injury. Perkins v. Standard Oil Co.,
395 U.S. 642, 648-49, .. . (1969). Since the purpose of
the antitrust laws is the ‘‘prevention of restraints to free
competition in business and commercial transactions,”’
Apex Hosiery Co. v. Leader, 310 U.S. 469, 493 ...
(1940), it follows that only those persons injured in their
competitive positions in a business in which they are
engaged should be permitted standing to sue under the
Clayton Act. GAF Corp. v. Circle Floor Co., 463 F.2d
752, 758 (2nd Cir. 1972), cert. dismissed, 413 U.S. 901,
.. « (1973). [Ragar v. T. J. Raney & Sons, 388 F. Supp.
1184, 1187 (E.D. Ark.), affirmed, 521 F.2d 795 (8th Cir.
1975).]
The consumers in this action allege no injury to a
business enterprise. They maintain, however, that an injury to
their pocketbook is an injury to a sufficient commercial in-
terest to satisfy the standing requirements in the ninth circuit.
This court disagrees. A plaintiff must show an injury to a
competitive interest in a business in which he or she is engag-
ed to assert a cause of action under the antitrust laws,
specifically section 4 of the Clayton Act.°®
* “Our evaluation of the record in light of the applicable case
law, convinces us that the district court correctly ruled....
Accordingly, we affirm on the basis of the district court’s soundly
reasoned opinion, reported at 388 F. Supp. 1184 (E.D. Ark.
1975).”” Ragar v. T. J. Raney & Sons, 521 F.2d 795, 796 (8th Cir.),
affirming 388 F. Supp. 1184 (E.D. Ark. 1975).
* Cf. Chattanooga Foundry and Pipe Works v. C ity of Atlanta,
203 U.S. 390 (1906) (The city of Atlanta was injured in its pocket-
86
Unredressed Injury To Consumers
The adequacy of government remedies in these cases may
be assailed. But the impotence of the individual consumer to
recover under the existing antitrust laws should not prompt
the courts to legislate a cause of action that does not exist in
this circuit. That is for Congress to do.
Largely because of the lack of protection afforded the
small businesses and the individual consumers by the 1890 and
1914 antitrust acts, the Antitrust Improvements Act of 1976
added civil process amendments to the laws together with a
requirement of premerger notification and a parens patriae
cause of action for states whose citizen consumers are injured
in the future. 45 U.S.L.W. 139 (October 19, 1976). The
parens patriae portion of this Act was designed to strengthen
the ability of state attorneys general to attack antitrust viola-
tions directed at individual consumers, the
honest businessmen and hardworking consumers [who]
are the real beneficiaries of this bill. (Congressional
Record, S 15410, September 8, 1976, remarks of Sen.
Kennedy.)
The protection of individual consumers, nickeled and dimed
to death by price fixing violations of department stores and
other retail sales entities, is left to the government. If
businesses, even small businesses, as distinguished from if-
dividual consumers, are injured in the price fixing activities of
antitrust law violators, then they have a remedy under the
Clayton and Sherman Acts. The new amendments will provide
consumers with a remedy to be asserted by their state at-
torneys general. But section 4 of the Clayton Act of 1914,
amending the Sherman Act of 1890, did not, as Congress
understood those acts, arm the individual consumer with a
cause of action.
book, but the decision does not support a position contrary to that
taken here. The city was in the business of ‘conducting a system of
waterworks, and wishing to buy iron pipe, was led, by reason of
the illegal arrangements between the members of the trust, to pur-
chase the pipe ... at a price much above what was
reasonable ... .’’ 203 U.S. at 395.
87
Even the 1976 amendments to the antitrust laws may be
inadequate leaving consumers largely unprotected since
maintenance of an action rests in the sole discretion of the
state attorneys general. And with today’s interest in consumer
rights, the result that this opinion portends might seem at
once atrocious and inequitable. It is inequitable to permit the
violators, generally large corporations, to retain their ill-gotten
gains. And it seems anomalous to permit the small
businessman purchasing an automobile at an unlawfully in-
flated price to recover merely because he purchased the
automobile for his business, but yet deny recovery to an in-
dividual consumer who purchased the same model automobile
at the same inflated price because the consumer intends only
to use the car for personal transportation. The costume
designer in a theatre will be permitted to recover when a
women’s clothing item is purchased for a commercial
theatrical production at an illegally inflated price whereas the
individual consumer, purchasing the item for use at a costume
party will be unable to recover.
But as inequitable as these, or other easily imagined fac-
tual situations may be, the Courts should not broaden the
Operative scope of those laws. That is the exclusive province
of Congress under the Constitution of the United States.
Section 16 Remedies For Consumers
The consumers in this action have also claimed a right to
relief under section 16 of the Clayton Act, 15 U.S.C. Sec. 26,
which provides for injunctive relief:
Any person, firm, corporation, or association shall be en-
titled to sue for and have injunctive relief, in any court
of the United States ... against threatened loss or
damage by a violation of the antitrust laws . . . when and
under the same conditions and principles as injunctive
relief against threatened conduct that will cause loss or
damage is granted by courts of equity, under the rules
governing such proceedings... .
88
The government action in this case, for criminal and civil in-
junctive action against the defendants, provides an adequate
protection against future harm from these defendants. The
plaintiffs are not, under the circumstances here, faced with ir-
reparable future injury which would entitle them to injunctive
relief under section 16.
Conclusion
The plaintiffs in these related cases cannot recover treble
damages under section 4 of the Clayton Act because they have
failed to allege an injury to a sufficient commercial enterprise
or business in which they are engaged. Neither are they entitl-
ed to injunctive relief under section 16 since they are not ir-
reparably injured. Therefore,
It Is HEREBY ORDERED that this matter, in its entirety,
be and is dismissed for failure of the plaintiffs to allege suffi-
cient standing to sue.
DaTED: Jan. 11, 1977
Spencer Williams
UNITED STATES DISTRICT
JUDGE
89
UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF CALIFORNIA
No. C 76 1210 SW
FLoYD Brown, individually, and on behalf of others
similarly situated, Plaintiff,
V.
FEDERATED DEPARTMENT STORES, INC., d/b/a I. MAGNIN &
Co., and BULLOCK’s SOUTHERN CALIFORNIA; SAKS & Com-
PANY, d/b/a SAKs FIFTH AVENUE, Defendants.
No. C 76 1671 SW
Davip M. KIMMEL, ROBERTA KIMMEL, Doris WIESEL, FRANK
WIESEL, and HELEN Baum, Plaintiffs,
Vv.
BARRIE SOMMERFIELD, GORDON FRANKLIN, NORMAN V.
WESCHLER, B. PAUL HEIDRICK, FEDERATED DEPARTMENT
SToRES, Etc., SAKS & ComPANy, Etc., UpTOWN RETAIL
GUILD, INC., ANDREW GOODMAN, and BERGDORF GOODMAN,
Inc., Defendants.
ORDER
(Filed January 13, 1977)
On January 11, 1977, this court caused a memorandum
order to be filed in five cases which had previously been
related to these two cases. The same reasoning in that
memorandum order controls the disposition of these two
cases. See Memorandum Order, January 11, 1977, filed in
civil numbers C 76 867 SW, C 76 869, C 76 1110, C 76 1363
SW, and C 76 1429, incorporated herein and made part
hereof by reference). Therefore,
90
It Is HEREBY ORDERED that these two related cases are
dismissed in their entirety.
DaTeD: January 13, 1977
Spencer Williams
UNITED STATES
DISTRICT JUDGE
91
UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF CALIFORNIA
No. C 76 1210 SW
FLoyD Brown, individually, and on behalf of others
similarly situated,
Plaintiff,
We
FEDERATED DEPARTMENT STORES, INC., d/b/a I. MAGNIN &
Co., and BULLOCK’s SOUTHERN CALIFORNIA; SAKS &
CoMPANY, d/b/a SAKS FIFTH AVENUE,
Defendant.
No. C 76 1671 SW
Davip M. KIMMEL, ROBERTA KIMMEL, Doris WIESEL, FRANK
WIESEL, and HELEN BAuM,
Plaintiffs,
v.
BARRIE SOMMERFIELD, GORDON FRANKLIN, NORMAN V.
WESCHLER, B. PAUL HEIDRICK, FEDERATED DEPARTMENT
STORES, ETC., SAKS & COMPANY, ETC., UPTOWN RETAIL
GUILD, INC., ANDREW GOODMAN, and BERGDORF GOODMAN,
INC.,
Defendants.
JUDGMENT
(Filed January 13, 1977)
it Is HEREBY ORDERED that judgment in the above two
related cases be entered in favor of defendants and against
plaintiffs.
DaTED: January 13, 1977
/S/ SPENCER WILLIAMS
United States District Judge
93
MUNICIPAL COURT FOR THE PALO ALTO-MOUNTAINVIEW
JUDICIAL DISTRICT
COUNTY OF SANTA CLARA, STATE OF CALIFORNIA
No. 38929
FLoyp R. Brown, individually and on behalf of others
similarly situated,
Plaintiffs,
V.
FEDERATED DEPARTMENT STORES, INC., d/b/a I. MAGNIN &
Co. and BULLOCK’s; SAKS & COMPANY, d/b/a SAKS FIFTH
AVENUE; and Does I through XX,
Defendants.
COMPLAINT FOR DAMAGES AND RESTITUTION
(Jury Demanded)
(Filed February 17, 1977)
Plaintiff, FLoyp R. BRowNn, complains of Defendants
FEDERATED DEPARTMENT STORES, INC., d/b/a I. MAGNIN &
Co. and BULLOcK’s; SAKS & COMPANY, d/b/a SAKS FIFTH
AVENUE; and Does I through XX, and each of them, and
alleges:
I
Class Action
(1) Plaintiff brings this action on his own behalf and
pursuant to §392 of the California Code of Civil Procedure
on behalf of all persons simiiarly’situated. The classes which
Plaintiff represents are composed of the following:
(a) All persons residing in Los Angeles, Orange, San
Bernadino, San Diego, Santa Barbara, and Ventura
Counties who, during the period from 1963 to present,
have made retail purchases of women’s clothing from I.
MAGNIN on a charge basis.
PREVIOUS PAGE WAS BLANK |
94
(b) All persons residing in Los Angeles, Orange, San
Bernadino, San Diego, Santa Barbara, and Ventura
Counties who, during the period from 1963 to present,
have made retail purchases of women’s clothing from I.
MAGNIN on a check or cash basis.
(c) ALL PERSONS RESIDING IN Los ANGELES, ORANGE,
SAN BERNADINO, SAN DIEGO, SANTA BARBARA, AND
VENTURA COUNTIES WHO, DURING THE PERIOD FROM 1963
TO PRESENT, HAVE MADE RETAIL PURCHASES OF WOMEN’S
CLOTHING FROM BULLOCK’S On a charge basis.
(d) All persons residing in Los Angeles, Orange, San
Bernadino, San Diego, Santa Barbara, and Ventura
Counties who, during the period from 1963 to present,
have made retail purchases of women’s clothing from
BULLOCK’S on a check or cash basis.
(ec) All persons residing in Los Angeles, Orange, San
Bernadino, San Diego, Santa Barbara, and Ventura
Counties who, during the period from 1963 to present,
have made retail purchases of women’s clothing from
SAKS FIFTH AVENUE on a charge basis.
(f) All persons residing in Los Angeles, Orange, San
Bernadino, San Diego, Santa Barbara, and Ventura
Counties who, during the period from 1963 to present,
have made retail purchases of women’s clothing from
SAKS FIFTH AVENUE On a check or cash basis.
(2) The persons in the classes are so numerous that the
joinder of all such persons is impracticable. The disposition of
their claims in a class action is a benefit to the parties and to
this Court. There is a well-defined community of interest in
the questions of law and fact involved affecting the parties to
be represented in that the same complained of conduct of
Defendants, as hereinafter alleged, constitutes a basis of
liability and injury to each member of the class hereinbefore
described. The named Plaintiff is a purchaser of women’s
clothing from I. MAGNIN, BULLOCK’s, and SaAKS FIFTH
AVENUE. The claims of the Plaintiff are typical! of those of
the class and Plaintiff will fairly and adequately represent the
interests of the class.
95
Il
Plaintiff
(3) Plaintiff, FLoyp R. Brown, is a resident of Laguna
Niguel, Orange County, California.
Defendants
(4) FEDERATED DEPARTMENT STORES, INC.
(‘‘FEDERATED’’), is hereby made a _ Defendant herein.
FEDERATED is a corporation organized and existing under the
laws of the State of Delaware. During the period of time
covered by this complaint, FEDERATED has engaged in the
retailing of women’s clothing in California under the trade
name of ‘“‘I. MAGNIN & Co.’”’ The principal offices of I.
MAGNIN & Co. are located in San Francisco, California.
During the period of time covered by this complaint,
FEDERATED has also commenced the retailing of women’s
clothing in California under the trade name ‘‘BULLOCK’s,”’
with principal offices located in Palo Alto, California.
(5) Saks & COMPANY (‘‘SaKs’’) is hereby made a
Defendant herein. SAKS is a corporation organized and
existing under the laws of the State of New York, with its
principal place of business in New York City. Saks is a
wholly-owned subsidiary of GimMBEL BROTHERS, INC. During
the period of time covered by this complaint, SAKs has been
engaged in the retailing of women’s clothing in California
under the trade name ‘‘SAKS FIFTH AVEUNE.”’
IV
Does
(6) The true names and capacities, whether individual,
corporate, associate or otherwise, of Defendants named herein
as Dogs | through XX, are unknown to Plainiiff at this time
who, therefore, sues said Defendants by such fictitious names
and will ask leave of court to amend this complaint to show
96
their true names and capacities when the same are ascertained.
Plaintiff is informed and believes and, upon such information
and belief, alleges that each of the aforementioned
Defendants sued herein as a ‘‘Dor”’ is in some way legally
liable for the events, happenings, or agreements hereinafter
mentioned.
Vv
Agents And Co-Conspirators
(7) The Defendants, and each of them, at all times
mentioned herein, were the agents of all other Defendants,
and each of them, and were acting in the course and scope of
said agency. Various other corporations and individuals not
made Defendants in this complaint participated as co-
conspirators with the Defendants named in the offenses
charged herein and performed acts and made statements in
furtherance thereof.
VI
Trade And Commerce
(8) The Defendants are among the largest retailers
specializing in the sale of women’s clothing in California.
They have an image recognized in the women’s clothing
industry, and by the consumer, of selling fashionable
women’s clothing of quality fabrics and favored styling. In
1973 alone, they accounted for approximately $60 million in
retail sales of women’s clothing in California.
(9) In the retailing of women’s clothing, the difference
between the cost price of an item and its retail price is known
as the ‘‘markup.”’ Retailers maintain *‘markup lists’’ which
show the retail price to be charged for items purchased at a
given cost level. These markup lists are used by retailers to
price items sold to the consumer.
97
VII
Offenses Charged
(10) Beginning at least as early as 1963, and continuing
thereafter until April 1974, the Defendants and co-
conspirators engaged in a continuing combination and
conspiracy to wilfully defraud their retail customers by means
of a price-fixing conspiracy.
(11) The aforesaid combination and conspiracy has
consisted of a continuing agreement, understanding, and
concert of action among Defendants and co-conspirators to
raise, fix, maintain and stabilize prices charged by Defendants
for the sale of women’s clothing in California, including Los
Angeles, Orange, San Bernadino, San Diego, Santa Barbara,
and Ventura Counties.
(12) In formulating and effectuating the aforesaid
combination and conspiracy, the Defendants and co-
conspirators did those things which they combined and
conspired to do, including, among other things, the following:
(a) met and engaged in telephone conversations to
discuss prospective markups and retail prices for the sale
of women’s clothing to customers of Defendants;
(b) exchanged markup charts used by Defendants in
establishing the retail prices of women’s clothing sold to
customers of Defendants;
(c) established agreed-upon markups and retail prices
for the sale of women’s clothing to customers of
Defendants; and
(d) adhered to agreed-upon markups and retail prices
for the sale of women’s clothing to customers of
Defendants.
98
Vill
Effects
(13) The aforesaid combination and conspiracy has had
the following effects, among others:
(a) prices of women’s clothing have been raised, fixed,
stabilized, and maintained at artificial noncompetitive
levels; and
(b) customers of the Defendants have been deprived of
free and open competition in the sale of women’s
clothing.
IX
Injury To Plaintiffs
(14) As a direct and proximate result of the unlawful acts
and conduct of Defendants and co-conspirators hereinabove
alleged, Plaintiff and members of the classes have suffered
injury in that they have been forced to pay substantial
overcharges on retail purchases of women’s clothing.
», 4
Fraudulent Concealment
(15) At all times herein mentioned, the Defendants and
the co-conspirators took measures to conceal from the
Plaintiffs and the members of the Plaintiff class the violations
hereinabove alleged. The meetings and the exchanges of
markup charts hereinabove alleged took place in an
atmosphere of the strictest secrecy, and were never revealed to
anyone other than the representatives of the Defendants and
the co-conspirators who participated therein. As a result of
the Defendants’ fraudulent concealment of their violations,
the Plairtiff and the members of the Plaintiff classes were
unaware of the existence of the claims alleged herein, and
could not, by the exercise of reasonable diligence, have
discovered the existence of such claims, until the year 1976.
99
XI
First Cause of Action
(Fraud And Deceit)
(16) Plaintiff incorporates and re-alleges Paragraphs I(1)
through X(15) herein as though fully set forth.
(17) During the period of time from 1964 until at least
1974, in its retail stores, Defendants and their co-conspirators
falsely and fraudulently represented that the prices charged
therein for women’s clothing were fair ones, dictated by free
market competitive pressures and not pursuant to a price-
fixing scheme as hereinbefore charged.
(18) These representations so made by Defendants and
their co-conspirators were in fact false. The true facts are that
these Defendants and their co-conspirators wilfully engaged in
a fraudulent and wrongful course of conduct, as hereinbefore
more fully alleged, intended to wrongfully extract large sums
from their said retail customers, and _ this illegal scheme
succeeded in that goal for in excess of ten years.
(19) When Defendants and their co-conspirators made
these false allegations of fair play with regard to pricing, they
knew them to be false; such statements were made by them
with the intent to defraud and deceive Plaintiffs, and each of
them, and to induce them to unjustly enrich Defendants
pursuant to Defendants’ said plot.
(20) Plaintiffs, at the times said representations were
made, were ignorant of their falsity, but believed them to be
true. In reliance thereon, Plaintiffs were induced to and did
Pay excessive sums to unjustly enrich said Defendants and
their co-conspirators; had Plaintiffs known the true facts they
would not have taken such action.
(21) Plaintiffs, and each of them, have been injured
thereby as set forth below.
100
Xil
Second Cause Of Action
(Unfair Business Practices)
(22) Plaintiffs incorporate and re-allege Paragraphs I(1)
through X(15) herein as though fully set forth.
(23) Plaintiffs, and each of them, further allege that such
a price-fixing conspiracy, and its attendant credit balance
abuse, are a prohibited and unfair business practice, and said
practices have proximately injured Plaintiffs, and each of
them, as hereinbelow alleged.
XII
Third Cause Of Action
(Civil Conspiracy)
(24) Plaintiffs incorporate and re-allege Paragraphs I(1)
through X(15) herein as though fully set forth.
(25) The various acts and representations of Defendants
and their co-conspirators, and each of them, as herein set
forth, were made pursuant to and in furtherance of, the
aforesaid combination and conspiracy between _ these
Defendants and their co-conspirators. This activity was known
to be illegal by Defendants. The purpose thereof was to sell to
Plaintiffs, and each of them, said items of clothing at a price
much greater than their value, with the intent of said
Defendants to divide the profits derived therefrom among said
Defendants.
(26) Plaintiffs, and each of them, did purchase said retail
goods, whose prices were illegally fixed pursuant to said
conspiracy, as set forth hereinbelow.
101
XIV
Fourth Cause Of Action
(Restitution Of Moneys Had And Received)
(27) Plaintiffs incorporate and re-allege Paragraphs I(1)
through X(15) herein as though fully set forth.
(28) By reason of the effectiveness of the aforesaid
conspiracy, Defendants, and each of them, have wrongfully
retained moneys of Plaintiffs, and each of theirs, and interest
thereon, in a sum not yet ascertained, but which Defendants
are not entitled equitably to retain.
(29) By reason of the foregoing premises, and the wilful
nature thereof, Defendants must be obliged not only to make
restitution of such fraudulently converted sums, but to pay
exemplary and punitive damages therefor.
WHEREFORE, Plaintiff prays that the Court adjudge,
enjoin, and decree as follows:
(1) That this is a proper class action.
(2) That Defendants and co-conspirators have engaged in
an unlawful conspiracy and combination to restrain trade and
commerce in women’s clothing in California, including Los
Angeles, Orange, San Bernadino, San Diego, Santa Barbara,
and Ventura Counties.
(3) That Plaintiff and members of the classes have been
proximately injured by reason of one or more of the above
alleged unlawful acts in an amount not less than $600 apiece
for each violation of their property rights as alleged in the
First through their FourtH Cause(s) OF ACTION
(4) That Plaintiff and members of the classes recover
damages on each of their causes of action.
(5S) That Plaintiff and members of the classes be awarded
reasonable attorneys’ fees and costs of litigation.
(6) That Plaintiff and members of the classes be awarded
such other and further relief as the Court may deem just and
102
proper, including appropriate multiple damages, and
exemplary and punitive damages, and all sums so awarded
bear interest at 7% from the date of each injury.
DATED: February 17, 1977.
LAW OFFICES OF JERROLD
N. OFFSTEIN SUMMERHAYS
& SWOPE
By: /S/ JERROLD N. OFFSTEIN
Attorneys for Plaintiffs
Pursuant to §631 of the California Code of Civil
Procedure, jury trial in the instant matter is hereby
demanded.
DATED: February 17, 1977.
LAW OFFICES OF JERROLD
N. OFFSTEIN SUMMERHAYS
& SWopPE
By: /s/_ JERROLD N. OFFSTEIN
Attorneys for Plaintiffs
103
UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF CALIFORNIA
C 77 0577
Floyd R. Brown, Individually and on behalf of others
similarly situated,
Plaintiffs,
V.
FEDERATED DEPARTMENT STORES, INc., d/b/a 1. MAGNIN &
Co., and BULLOCK’s; Saks & CoMPANY, d/b/a Saks FIFTH
AVENUE; and Does I through XX,
Defendants.
NOTICE OF RELATED CASES
(Filed March 21, 1977)
In accordance with Local Rule 101, the undersigned
counsel for defendants Federated Department Stores, Inc. and
Saks & Company hereby advise the Court that the instant ac-
tion, which was removed to this Court on this date, is related
to seven other purported class actions, which have previously
been related and assigned to the Honorable Spencer Williams,
which actions have previously been dismissed. Included in
such actions is the action entitled Brown v. Federated Depart-
ment Stores, Inc., et al. which is an action filed by the plain-
tiff herein against defendants Federated and Saks.
Attached hereto as Exhibit A is a copy of an order
assigning to Judge Williams the seven related actions:
Weinberg, et al. v. Federated Department Stores, Inc., et al.,
C-76-867-SW; Eisenberg, et al. v. Federated Department
Stores, Inc., et al., C-76-869-SW; Moitie v. Federated Depart-
ment Stores, Inc., et al., C-76-1110-SW; Musser v. Federated
Department Stores, Inc., et al., C-76-1363-SW; Morgan v.
Federated Department Stores, Inc., et al., C-76-1429-SW;
Brown v. Federated Department Stores, Inc., et al.,
C-76-1210-SW; and Kimmel, et al. v. Federated Department
Stores, Inc., et al., C-76-1671-SW.
104
Like the other related cases, the instant action is a pur-
ported class action seeking damages against Federated Depart-
ment Stores, Inc. and Saks & Company, among others, which
arises Out of the same alleged facts. Accordingly defendants’
counsel submit that the instant case is related to the prior
seven actions, and request that it be assigned to Judge
Williams.
DATED: March 21, 1977.
ARNOLD & PORTER
ABE KRASH
JEROME I. CHAPMAN
IRVIN B. NATHAN
LAWRENCE C. MAISEL
MCKENNA & FITTING
PAUL FITTING
CHARLES G. MILLER
By: /S/ CHARLES G. MILLER
CHARLES G. MILLER
Attorneys for Defendant
FEDERATED DEPARTMENT
STORES, INC.
SOLINGER & GORDON
EUGENE H. GORDON
JOHN C. Grosz
STEINHART, GOLDBERG,
FEIGENBAUM & LADAR
JAMES T. FOUSEKIS
DONALD E. KELLEY, Jr.
By: /S/ JAMES T. FOUSEKIS
JAMES T. FOUSEKIS
Attorneys for Defendant
SAKS & COMPANY
105
EXHIBIT A
UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF CALIFORNIA
RELATED CASE ORDER
(Filed August 30, 1976)
A notice of related cases has been filed Suggesting that
the following cases are related within the meaning of L. R.
101 or L. R. 200.
C-76-1210 RHS — Brown vs. Saks, et al.
C-76-869 SW — Eisenberg vs. Saks, et al.
C-76-867 SW — Weinberg, et al. vs. Saks, et al.
C-76-1363 SW — Musser, et al. vs. Saks, et al.
C-76-1110 SW — Moitie vs. Saks, et al.
C-76-1429 SC — Morgan, et al. vs. Saks, et al.
As the Judge assigned the earliest filed case, I advise the
Assignment Committee that these cases are not related.
United States District Judge
As the Judge assigned the earliest filed case, | advise the
Assignment Committee that these cases are related within the
meaning of L. R. 101 or L. R. 200.
/S/ SPENCER WILLIAMS
United States District Judge
106
ORDER
It appearing to the Assignment Committee that these
cases are related within the meaning of L. R. 101 or L. R.
200, it is ordered that all of such cases are reassigned to
SPENCER WILLIAMS. Counsel are instructed that all future
filings shall bear the initials SW immediately after the case
number.
ASSIGNMENT COMMITTEE
By: /s/ ROBERT F. PECKHAM
Chief Judge
DaTED: August 30, 1976
Copies To: Counsel
Courtroom Deputies
Special Projects
Case Systems Administrators
107
UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT
OF CALIFORNIA
March 21, 1977
RELATED CASE ORDER
A notice of related cases has been filed Suggesting that
the following cases are related within the meaning of L. R.
101 or L. R. 200.
C-77-0577-RHS_ Brown v. Federated Dept. Stores, Inc.,
et al.
C-76-867-SW Weinberg, et al. v. Federated Dept. Stores,
Inc., et al.
C-76-869-SW Eisenberg, et al. v. Federated Dept. Stores,
Inc., et al.
C-76-1110-SW Moitie v. Federated Dept. Stores, Inc., et
al.
C-76-1363-SW Musser v. Federated Dept. Stores, Inc., et
al.
C-76-1429-SW Morgan v. Federated Dept. Stores, Inc.,
et al.
C-76-1210-SW Brown v. Federated Dept. Stores, Inc., et
al.
C-76-1671-SW Kimmel, et al. v. Federated Dept. Stores,
Inc., et al. .
As the Judge assigned the earliest filed case, I advise the
Assignment Committee that these cases are not related.
United States District Judge
As the Judge assigned the earliest filed case, I advise the
Assignment Committee that these cases are related within the
meaning of L. R. 101 or L.R. 200.
/S/ SPENCER WILLIAMS
United States District Judge
=e
es
108
ORDER
It appearing to the Assignment Committee that these
cases are related within the meaning of L. R. 101 or L. R.
200, it is ordered that all of such cases are reassigned to
SPENCER WILLIAMS. Counsel are instructed that all future
filings shall bear the initials SW immediately after the case
number.
ASSIGNMENT COMMITTEE
By: /s/ ROBERT PECKHAM
Chief Judge
DATED: March 21, 1977
Copies To: Counsel
Courtroom Deputies
Special Projects
Case Systems Administrators
109
UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF CALIFORNIA
NO. C-77-0576-SW
MarILyYN MoitiE, individually, and on behalf of others
similarly situated,
Plaintiffs,
Vv.
FEDERATED DEPARTMENT STORES, INC., d/b/a I. MAGNIN &
Co., and BULLOCK’s NORTHERN CALIFORNIA; SAKS &
Company, d/b/a Saks FIFTH AVENUE; and Does I through
XX,
Defendants.
NO. C-77-0577-SW
FLoyD R. Brown, individually, and on behalf of others
similarly situated,
Plaintiffs,
Vv.
FEDERATED DEPARTMENT STORES, INC., d/b/a I. MAGNIN &
Co., and BULLock’s; Saks & Company, d/b/a Saks FIFTH
AVENUE; and Does I through XX,
Defendants.
NOTICE OF MOTION AND MOTION OF
DEFENDANTS FEDERATED DEPARTMENT STORES,
INC. AND SAKS & COMPANY TO DISMISS
(Filed April 8, 1977)
To PLAINTIFFS MARILYN MOITIE AND FLoypD R. BROWN AND
THEIR ATTORNEYS OF RECORD:
PLEASE TAKE Notice, hereby given, that at 10:00 a.m. on
Friday, April 29, 1977 in the Law and Motion Department of
the Honorable Spencer Williams, United States District Court,
110
Northern District of California, defendants Federated
Department Stores, Inc. and Saks & Company will move and
do hereby move for an order dismissing the above actions on
the grounds that they are barred by the doctrine of res
judicata.
Said Motion will be made pursuant to Rule 12(b) (6) of
the Federal Rules of Civil Procedure and will be based on this
Notice of Motion, the Memorandum of Points and
Authorities filed herewith, the papers and files in these
actions, and the papers and files in Moitie v. Federated Dept.
Stores, Inc., et al., C-76-1110-SW, and Brown v. Federated
Dept. Stores, Inc., et al., C-76-1210-SW, previously dismissed
by this Court.
DaTeD: April 8, 1977.
11]
ARNOLD & PORTER
ABE KRASH
JEROME I. CHAPMAN
LAWRENCE C. MaAISEL
PAUL C. BeEsozzi
McKENNA & FITTING
PAUL FITTING
CHARLES G. MILLER
By: /S/ JEROME I. CHAPMAN
JEROME I. CHAPMAN
Attorneys for Defendant
FEDERATED DEPARTMENT
STORES, INC.
STEINHART, GOLDBERG,
FEIGENBAUM & LADAR
JAMES T. FOUSEKIS
DONALD E. KELLEY, Jr.
SOLINGER & GORDON
EUGENE H. GORDON
JOHN C. Grosz
By: /s/ JAMES T. FouSEKIS
JAMES T. FOUSEKIS
Attorneys for Defendant
SAKS & COMPANY
112
UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF CALIFORNIA
NO. C-77-0576-SW
MaRILYN MoOITIE, individually, and on behalf of others
similarly situated,
Plaintiffs,
v.
FEDERATED DEPARTMENT STORE, INC., d/b/a I. MAGNIN &
Co., and BULLOCK’s NORTHERN CALIFORNIA; SAKS &
ComPANny, d/b/a SAKs FIFTH AVENUE; and Does I through
XX,
Defendants.
NO. C-77-0577-SW
FLoyD R. BRown, individually and on behalf of others
similarly situated,
Plaintiffs,
Vv
FEDERATED DEPARTMENT STORES, INC., d/b/a I. MAGNIN &
Co., and BULLocK’s; Saks & ComMPaANy, d/b/a SAKS FIFTH
AVENUE; and Does I through XX,
Defendants.
MEMORANDUM OF POINTS AND AUTHORITIES OF
DEFENDANTS FEDERATED DEPARTMENT STORES,
INC. AND SAKS & COMPANY IN SUPPORT OF
MOTION TO DISMISS
113
TABLE OF CONTENTS
PAGE
Tams Of Avmmongims .....05..540000 oe
i. ENPRODUCTION «5.06 005s vc vad eee
I]. STATEMENT OF THE CASE.................cccece.
A. The First Moitie and Brown Complaints And
Ther Dismal © o..s san ee
B. The Second Moitie And Brown Complaints ....
Ill. THE Doctrine OF Res Judicata REQUIRES DISMISSAL
Or THE COMPLAINTS, BECAUSE THIS CoURT HAs
ALREADY RENDERED A FINAL JUDGMENT ON THE
MERITS OF THE PLAINTIFFS’ CLAIM................
A. The Doctrine Of Res Judicata Is A Rule Of
Fundamental Importance In The Administration
OF FUGNGE soc cx ccthetie eee
B. The Doctrine Of Res Judicata 1s Squarely Ap-
plicable To The Present Complaints ..........
1. This court’s dismissals of the prior Moitie
and Brown actions were final judgments on
CRO WNOINE: 5. okb asics vine eee
2. Plaintiffs’ new complaints raise exactly the
same claims as their previous suits........
3. Plaintiffs’ change of legal theories doe
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