Petition for Writ of Certiorari — Mackey v. Sears (No. 68)

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Supreme Court of the Luited States.

eo OCTOBER _— 1956. 3

; No. ZO% 6%

BRICK A. MACKEY,

Mies Petitioner.

Us. pe an

SEARS ROE BU ( K i7n. & New York corporation,

: . Respondent.

PETITION FOR WRIT OF CERTIORARI TO THE

UNITED STATES COURT OF APPEALS FOR

THE SEVENTH CIRCUIT. |

‘ é . ’ ; a a ae x . P

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Joux Ps AUL STEVENS eat ay

» Epwarp |. !orascuia ie

105 S, La Salle St.

Chicago, Hhinois ;

Attorneys for Petitioner —

- RoTHSCHILD, Pharr. STEVENS & -Barry

Of Cennsel. Sits

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The Scheffer Press, Inc.—ANdover 3-685

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x Opinions Below sai ertbifanesta Pisin dha piinhitte ps caitiad koe slate i,

1. > Jurisdiction ~.....oj-.000: ae aoe

Questions Pr aenaied dinhinioes RSP ae se ieanibsa Oar

* Statutes” Involved SER Veber es Oe: iar heme! pcaicialcs | B

5, NAIR tices tctarreptirecinhcpmepetinentniphemmnneyinfnines p

* - ‘Reasons: For. Granting the Writ ......c.cgecenee sien:

- , 1. The Sherman Act question is important. .......... at ee

IEMA | 2. The Robinson-Patman Act question_involves_p

QL ERFRet COMMIT. nn. esissesssessensseneeenionsnnscnetanesneeeenseenees 100°

_ Conclusion ........... lpeenees : eceemre ener cari stidweaoes 10

APPORdix. A>. .ccsssccseccaewisrcccedesinsoeg Sistas cleuicbisaatae etaiiacegunceed la

Opinion of the Court of ‘Appeels ree ene eS | y

, _ Opinion, of the District IE icicdethensssinteoy ninesunere 108:

Pe Append By caccscssgeesnceeinese desi initnccippiliivccccnn Sk

| . Section 1 of _flie Cusien OE a, sich ee

—__. .*- . Seetian 4of ‘the CRIN Siciictesniccencncaninccacone, 26a

> Section 3 of the Robinson- Patman Act isteadvndesta ew. 1268

Section ‘TY of the Sherman BEE ccttsnccengedasbbsaitiave aod

Section 2 of the’ Sherman Act ssisuevetenssonegnensens Hpk Daioh Ue 27a

Appendix © cuminennndes scictaeikaseciabniseectee hdc a 28a

| TABLE oF Cases. Crrép. |

Appalachian Coals v. United States, 288 U.S. 344,"

= > IIL: sl lee teste cana tence apis Secosnieian 6

-" Kicher Stewart Cos v. SForeph E. Seagram &: Sons,

iy ig Be i TE apes igivsonerstnsainindnersnsieeseincsss ee

_ Nashville Milk” Company v. Carnation Company, - .

¥. 2d 86 .. iain slclonioniniicn linked hiileaisitaiae cable -

1 ° ‘

o ‘ 7 is

; Hc a a

he PAGE

‘Northern Securities Co. v. Dnited States, 193 .E.S.

197, 400, 404, 405 ..iciuinmmprnnnninnainnnsnnnn 8,9

United States v. ” American Tobacco Co., 221 US.

106, sR SRS As: sek Dagutncalbiadubaasiomaubennianie Se

: ‘United States v. Now-York Great Atlantic & Pacific

Tea {'o.,173 F. 2d 79 (C.A. .7, 1949) ; 67 F.Supp. -

626, G34, G67. (ELD. T., 1946) 1csaccmewennrernsenee 5°

United States v. Paramount. Pietures, Inc., 334 US

2, | | pee eee CS aS Dieu 9

United States v. Standard Oil Co. of New Jersey, 221 — :

aS cosine 1, 60-62- ss cFRESSESESTIpooocescoagpcaccnonne sev enseeeeeeereeecens 7 oO, 6, 7,8

4 United States Vv. Swift & Co., 286 U.S: 106, 116 a ee

: _ United States v. Yellow Cab Co., 332 U.S. 218, : 227 .. oe

. Vanee v. Safeway Stores (not 9 tec: see ‘Appen- :

a cease bonteusnobid pbnabhandialiecdaleaaniedibeatahinaleinaaannntab posseaienene -10

ea oS SO tanta ‘Craniom.

| _Rahl, Conspiracy- and-the Antitrust ad 44 I. 83

ee oe Rev. 743, 766 fA OES eee 5:

> * Report of-the Attorney General’s ‘tuidoual Committee

. to. Study the Antitrust ——: 11, 34-35, 201 See assiand 5, 10

' °

° ¢

4 a = :

‘ sees Ix Tue tee

\ SUPREME COURT OF THE UNITED STATES

# . 4 .. OcroBer Ter, 1956., ‘ ies . >

No.

____..*_ BRUCE A. MACKEY,

Petitioner,

vs. :

SEARS ROEBUCK & CO., a New York corporation,

. “ ee a9 ce, Respondent.

PETITION FOR WRIT OF CERTIORARI TO THE wre

. UNITED STATES COURT OF APPEALS FOR . a

<< THE SEVENTH CIRCUIT. . aie

—_—_——___

“May a THE Court:© te ee

; -.Petitioher, Bruce A. Mackey, prays that’ a writ of.

vertiorari ‘issue to review the judgmert of the Court of

' Appeals for the Seventh Circuit affirming the judgment =)

of the District Court for the Northern District°of Ilinéis ~~

i dismissing Count I of petitioner’s complaint for failure

7 a cto. state a claim upon which relief can be granted. — —e

yee “ok Sa.

OPINIONS BELOW. —

The opinion of the District Court (Rk. 22-35), as amended

(R. 35-36), is not official Teported. The opinion of the

Court ‘of Appeals ix reported at 237 F.2d 869, Bath :

these -apinions are set forth in Appendix A to thjs peti-

* *.

~ —

: oy, aaa od

tron: . Prior opimens of ‘this Court and cf-the Court af

Appeals - sustaiming appeila ‘isdiction are ceperted—.

Cat BOL Lv S427 and 218° F.2d 295.

uae aL eern JURISDICTION.

The jurisdiction of the. Court of Appedils to review

| the judgment of the- District Court dismissing less than

all of the claims presented by the complaint was sustained

—s by this Court in 351 U.S. 427 (No. 34, O. T. 1955). ‘The

jddgment. of the Court of Appeals was éatered on. Novem:

bert, 1956. The jurisdjetion of this Cozrrt is invoked

under 28 USC. §1254. Federal jurisdiction of Count t.

is based.on 1s U.S.C. $15.

| ~ fe

; “SY QUESTIONS PRESENTED. fo

* ie a hether the prédatory “ponduet of a single Pa.

lirm—not. alleged to possess a monopoly—is prohibited

hy the Sherman Aet.

, See eye i a)

2. Wether a violation of Section 3 of the Robinson. |

Patman Act gives rise toa private action. “

j STATUTES INVOLVED.

Giactininn 1 and 4 of the Clayton Act, 38 Stat. 730, 731:

Section 3 of the Robinson-Patman Act, 49 Stat. 1528; and

Sections 1 and 2 of the Sherman Art, 26 Stat. 209, are’

— in Appendix B to this petition.

a ae Sa

The “questions presented by=this petition are raised by

__ the allegations of Ceaht I of the complaint, in which

‘petitioner claims treble damages under the antitrust laws.

The District Court held the ailezations insuffictent, dis-

missed ‘Count ! without leave to amend, and entered a

final judzment which has been affirmed by the Court of ©

_Appeafs. (R. 36-38; 55) It is the affirmance of that judg-—

—3-

ment which this petitioneseeks to review, The claims madé

-in the other counts of the complaint (four of which are

_ at issue in the trial court, and one cf which was aban-.

doned) are not involved here. The following facts are

alleged: hy ag Te = ‘

Petitioner, Bruce A: asians ia the aite shareholder of

Time Saver Tools, Inc. and is the former owner and sue-

tvessor in interest wot General Metalcraft. Company. Metal-

craft and Time Saver were both engaged in interstate,

‘commerce, the former as a manufacturer and vendor of

nursery Tamps, and the latter as a manufacturer and

vendor of tools (R. 34 3-4).

ae Sears Roebuck SCo., a. New. York corporation, is the

defendant (R. 4). Fhe tremendous volume of Sears’ pur- .

chases and sales gi¥es it the power to ‘ignore normal-busi-

- n€ss considerations, such as the probability of making-a

profit out of, a, particular transaction, in- determining. its

policies with respect to purchases ‘or sales of particular

products in particular areas. It has the power, by means .-

of actual or threatened refusals to. deal with partitufar.

suppliers in particular areas, or. by means of actual or

threatened sales of particular products in: particular areas.

at unreasonably low prices, substantially to destroy the

business and property of its small competitors and. its

small suppliers. Sears has exercised its power .against |

- suppliers who have- refused to do business on Sears’ |

terms (R45). :

In 1949 Sears «<temanded a price concession from pe-

titioner, antl ¢ hreatened to ruin him if the demand was

‘refiised (R. 6). The demand was refused, and thereafter

Sears has been engaged in a continuing plan to destroy -

- eath andgevery business in which Mackey has é¢ngaged or

-may attempt to engage (R. 5-6). The purpose and effect

= - =

id §

of ‘this plan has -been to discipline * small suppliers and —

small competitors of Sears and cause them to. accept

terms dictated by Sears when entering into business dea]-

_ings with Sears (R. 5, 8:9). Competition among persons

> who supply products of ‘the kind which Sears purchases -

_ for resale in its stores has thereby- been materially and

unreasonably restrained. (RR. 9). ex

Pursuant to its plan, Sears sold lampe' at a fraction of

‘its own cost im the cities in which petitioner sought to |

market famps, though. not elsewhere (R. 6-7); threatened

a third party with a boycott in order to induéé it to .re-

he to- deal further with ‘petitioner (R. 7); and, after

deliberately copying “petitioner's. advertised tools and

packaging, offered the copies for sale at a- price. aaew

manufacturing cost (| & >.) Se eS

The District. Court. ‘characterized Sears’ “conduct as.

“predatory” (R. 27). The Court of Appeals agreed with

this characterization. It stated:

-We think Sears’ conduct as alleged in the .

Qesfnplaint. was unreasonably anti-conrpetitive in both

“Purpose and effect...” ? 237 F. 2d at 874.

T he District Court held that no violation. of the Sherman *

Act or the ‘Robinson-Patman Act was alleged. The Court :

of: Appeals agreed that there was no violation of the

. Sherman Act—since the -complaint ‘does not allege that

Sears is dangérousky close ‘to achieving’a complete monop-

Sly of the lamp market or the too! market—but disagreed

with the basis of the District Court’s decision with re-—

spect, to Section 3 of the Robinson-Patman Act. On that -

4 “-0-

point, the Court of Appeals expressly held “that a eee

- upon which Felief can be granted is stated under Seetio 3

of the Robinson-Patman Act provided that-a cause of

action can exist under that section.’’ Following its ‘de-

cision’ in Nashville Milk Company ¥ Vv: Carnation Coughing, Ee

* 938*F. 2d 86, on the same day, the Court held that.a

private ~etion may not be maintained under Section’ 3 of

the Robinson- Patman Act. ;

REASONS FOR GRANTING THE WRIT. -

1.. The Sherman Act question is important.

. Group behavior which is unreasonably restrictive of

3 competitive conditions is ‘prohibited by the Sherman Act.

United States v. Standard. Oil qe. of New Jersey, 221

— U8. 1,°60-62. (1911); Report of the Attorney General’ 8 # ;

National Commitiee to Study the Antitrust Laws, p. 11,°

The Act applies even though the members of the group

are affiliated corporations. United, States v: Yellow Cab

Co., 352 U.S..218, 227 (1947); United States v. New York

Great Atlantic € Pacific Tea Co., 173 F. 2d 79 (C.A. 7

1949), see also 67 F. Supp. 626 at p. 634 (E.D. Ill. 1946) ;

Krefer-Stewart Co. v. Joseph E. Seagram & Sons, Ine.,

340 U.S. 211 (1951), In each of’ the cases cited, the ‘de-

fendant corporations comprised a -single business firm.

' No showing that: the firm constituted a s monopoly was

ee members of the same corporate family, but rather in the -

necessary.

Analysis | of these cases shows “that. the real vice in

defendants’ conduct lay not in the agreement among

fact that each of the firms unreasonably interfered with

the. economic freedom of others. A & P vitiously attacked

“. the Streamline Markets in Pittsburgh (see 67 F.. Supp.

at 667)-and abused .its suppliers; the defendant-firm in

K iefer-Stewari employéd a boycott as a means of dis

' ciplining its customers. See Report of the ‘Attorney Gen-

_ eral’s. ‘National Committee to Study the Antitrust Laws,

34-35; Rahl, Conspiraty and the Antitrust Laws, 44 TH.

UL. Rev. 743, 766 —. a 3

The. Court of Appeals specifically. stated that ‘Sears’

‘ conduct as alleged in the complaint was unreasonably *

anti-competitive in bth purpose and effect... °’. 237 F.

2d at 874, Thus, if Sears. had carried out ite. predatory

| _program through affiliated corporations, i atten, i of through

, different depart Tits - the sami: cena it is ue

of un reasonable conduct.

; The tradition of Sherman Act hitengretation: which has.

prevailed since the Standard: Oil deeision forecloses any’

such defense. The classic statement in | the Appeecties

we Coals + case is. pertinent: ;

. The purpose of the Sherman Anti-Trust Act *

a to prevent undue restraints of interstate com- .

merce, to maintaif§.its appropriate freedom in the —

public interest, to afford protection from. the subver-

sive or coercive influences of monopolistic endeavor.

As a charter of freedom, the- Act has a- generality

and adaptability comparable. to. that found to be de-

sirable in constitutional provisions. It does not go

aes -into detailed definitions which might either work in-,

jury to iegitimate enterprise or through particulari-

« zation defeat its purpose by- prov iding: loopholes for.

escape. The restrictions the Act itmposes are not me-

. chanical or artificial. Its general phrases, interpreted

‘ to- attain its fundamental objects, set up the essential

- standard of reasonableness. .. ..’? Appalachian Coa!s

v. United States, 288 U.S. 344, 359-360 (1933).-

- Section, 2 of ‘the, Sherman Act ‘employs the term

‘‘monopolize’’ to prohibit. conduct by a single, person that

..¢ leads to the results condemned by Section 1. In the |

Standard Oil case itself, this CoBrt expressly stated that

the Rule of Reason applies to Section 2/.as well as to.

Seetion 1 of the Sherman Act, and. that the term ‘‘monop-_

+ ee |

‘—m

olize*’ was intended (oproserite actions which produce

the restrictive consequences prohibited by Section .1. The

‘Court said : :

“*And<a. cantina of the text of the second

section serves to establish that it was intended to’

supplement the first, and to make sure that by no

. possible guise could the public policy embodied, in

| the first ‘section be frustrated. or evaded.

co 8 ndoubtedly,. "thes wende & monopolize’ and

‘monopolize,’-as used in the sé¢¢tion, reach every act

bringing about the. prohibited results. The ambiguity,

if any, is involved in determining what is intended by

-monopolize.. But this ambiguity is readily. dispelled ©

‘in the’ light of the previous history of the law of

restraint of trade to which we have referred and the

indication whith it gives of the.practical evolution by

which monopoly ‘and the acts which produce the same

resuit as monopoly, that is, an undue: restraint of

the ccurse of. trade, all came to be spbken of as, and

to be indeed synonymeus with, restraint of trade. In. —

other words, having by the first section forbidden all

means of ‘monopolizing trade, that is, unduly - re-.

straining it by means of every contract, combination,

cee. ‘the second section seeks, if possible, to make the-

prohibitions of the act all. ‘the more congglete and

‘perfect by embracing all attempts to reach? the end

prohibited by- the first section, that is, restraints of

trade, by any. attempt to monopolize, or monopolization

. thereof, even although, thé acts by which sueh results

are attempted to be brought about x Sy brought

about be not embraced: within the gen®ral. enumiera-

tion of the first section, And, of course, when the

-seeond section is thus harmonized with and mad®, as

it was intended.to be, the éomplement of the first,

it becomeés-obyvious that the criteria to be resorted

to in any given case for the purpose of ‘ascértaining

whether ‘violations of the section have been ‘com. -

mitted is the rule of reason guided by the established

—o

= - ,.

8 oe °

. ° 2

law and w the plain, pe to sabates ‘the - prohibition ;

* of. the act and thus the public policy which its re-

strictions wete obviously enacted to subserye. 2

221 U.S. at pp. 60-62. Dee Fa

See also, U niied States v. American Tobacco Co., 221.

_ U.S. 106, 180-181 (1911). , :

In his dissent in Northern Securities Co. United -

‘States, 193 U.S. 197, 400 (1904), Mr. Justice sala dif-

ferentiated between restraints which ‘members of a-:com-

‘bination voluntarily’ impose upon their own trade, and

* involuntary restraints which were imposed upon strangers

to the combination. The Northern Securities case, like.

> most Sherman. Act cdses, involved a voluntary restraint.

In that area, the dissentifig views of Mr. Justize Holmes’

have ‘not been followed: by the Court. Unquestionably,

however, the portion, of the Holmes dissént dealing with

involuritary Maisie kind involved in the instant

scase—properly st ites’ the law. He said:

“Combinations or conspiracies in restraint of trade,

on the éther hand, were combinations to keep strang~

ers to the agreement out of the business. The ob-

- jection to them ‘was not an objection to their effect

upon the parties making the contract, the members

of the-combination or firm, but an objection to their

’ intended effect upon strangers to the firm-and their

supposed consequent effect upon the public at large.

In other words, they were regarded as contrary, to.

public policy because they monopolized, or attempted

to monopolize, some portion of the’ trade or com-

merce of the realm. See United States v. E. C. Knight.

-Co., 156 U.S. 1. AH that is added to the’Ist section

by § 2 is that like penalties are imposed upon every

. single person who, without combination, monopolizes,

or attempts to monopolize,. commerce among. the -

states; and that the liability is éxtended to attempt-

~ aS

~ we

.-the firm has” sufficient power to provide it with an ‘‘op-

ing to monopolize any part of such trade or com-

meree. It is more important as an aid to the con-

struction of § } than it is on its own ac count. "

193 U.S. at 404, a: ee

Later in the ‘opinion, he stated:

sos “Ite was the. ferocious. extreme- of competition

with ‘others, not the cessation of oe among

. the partners, that. was the evil! feared. ;- * a3

— -

U e. & at ty RO. ee ia

a 1.4

- . i.

- That ‘the Sherman: Act applies to ‘‘the ferocious ex-

treme of competition with others’? has never been doubted.

In cases of that, character, it makes absolutely no differ-

-enee whether the predatory behavior is ‘pursued -by sév-:

oral firms or by a single firm, provided, of course, that

portunity: for_abuse”’

“The ‘degree of. power -required is not measured: by. any

fixed. mathematical calculation. Although ° mere size Hs

net. an offense against the Sherman Act, ‘‘. . . size -

carries with it an opportunity for abuse that is not ‘to

be ignored when the opportunity is proved to have been

utilized in the past.’* United States v. Swift & Co., 286

-U.S. 106, 116 (1932): Cf. United States v. Paramount

Pictures, Ine. ., 304 U.S. 131, 174 (1948)! ¥. e:

Only: a corporation with the kind of power possessed

by Sears could engage in the anti-competitive conduct

alleged in the complaint. .Sears' power provided Jt with

an opportunity: for abuse-that has in fact. been utilized. ~

The purpose 'and effect of Sears’ plan has een to re-

strain competition among its er and. small * com-

* petitors.

—10—

\ decision that — conduct by a- corporation of such

size is beyond the reach of the Sherman Act should be

reviewed by this Court.

i» @

2. The Robinson-Patman Act question involves a direct”

_ conflict.

The decision of the court, below that no _private- action

‘may be. maintained for vioiation of Section 3 of the

Robinson-Patman Act is in square conflict with the de-

cision of the Court of “Appeals for the Tenth Circuit. in “|

Vance v. Safeway Stores, decided on Qovember 6, 1956.

The Vance opinion is set ott ‘in’ full in Appendix C to

this Petition. - ; rae ;

‘The question is ineenneai ond the conflict per" be-

resolved by this Court. |

" CONCLUSION.

The two questions presented by this petition are closely

related: The Attorney General’s National Committee to

Study the Antitrust Laws has recommended the repeal of

Section 3 of the Robinson-Patman Act. This -recommen-

dation was _made on the assumption that the statute is

redundant -because predatory ‘price’ slashing | is obviously

_jwohibited by the Sherman Act. In’ partial explanation of

its rec ommendation, the ‘Cammittee stated :

“The prohibition in Section 3 of predatory pricing -

‘is legally redundant. -Predatory price slashing. ob-

viously constitutes an attempt to monopolize, already |

rendered: a crime ‘by Section 2 of the Sherman. Act,

and an unfair method of competition under Section 5

of the Federal Trade. Commission Act.’’ Report,

p. 201. at ale one ee a

~~ ee

This case presents the Court with a “unique opportunity

to resolve an important ‘conflict of decision with respect

to Section 3 of the Robinson-Patman ‘Act, and, jn the ©

same case, to determine the walidity of the premise-upon*

which the Attorney General’s Committee ‘predicated its

Beiseanagaenss for legislative Tevision of that statute.

It is respectfully submitted that the. questions pre-

‘serited by the petition are of great publie importance and.

merit. the attention of this Court. .

t Respectfully submitted, .

Pee | ip

| " Joux Pan. STEVENS |

ss Se Aes: Epwarp I. Roruscump .-

gee PS ih, . anege Tor eperaner.

Lee en aan

Sits, Horpuck & Co. |

Circuit Judges.

Mt.

ao @ :

—la—

Se ie 7 ft

APPENDIX A.

IN THE UNITED States Court oF APPEAIS

For the Seventh Circuit

e. Bes

“No..17225., |. ©. Seprewper Term anxp Sesstox, 1956-—

3 : - ° > ‘ ee apr i :

seh od M ACKEY, Individually,» os ek ae

" -Appeal from the

“and Time Saver - ‘Toous,—Exc., «>

Plai tifs-Appel 3 .

on io Appellants trict Court for the

ie. - Northern. District:

of illinois, Rastern

Division:

Defendant-A speller. |

‘icone A, 1956. dia Aaa.

Sag es foe tas: 2

AJoR and ‘Swain,

Siatore’ ‘those, Chief Judge,’ sand \

_Durry, Chief Judge!’ The: sesiheegs herein’ containing

six Counts was filed by two ‘plaintiffs, Bruce A. Mackey,

an individual, and Time Saver Tools, Inc., a corporation,

which was wholly owned hy. Mackey. ‘Hereinafter they

shall be referred to as piaintiff. a

The gist of the complaint -is that since 1949: Benge has

‘directed a course of predatory conduct successively

. three business ventures carried on by plaintiff, caine.

1) by localized price -eutting ‘which destroyed plaintiff’s,

2 ;

United Statés Dis- . ,

nursery lamp business + 2) by the use of a threatened boy- —

cott, induced a breach of plaintiff’s contract to sell on

_ commission certain tools and other products of the Vas-

coloy- ‘Ramet Corp., and 3) a destruction by Sears in 1952

of the. market for a new type 6f tool by means of unfair

competition. These general charges were -distribnted .

| —aa >

among the. six @ounts as follows: Count 1 alleges:

liberate and ‘anngunced plan by § “destroy. plain-

9 —tiff’s business activit\es; and asserts such plan is vio-.

lative of §§ T and ot the Sherman Act (19 U.S.C.

§§ 1 and 2), and of $53 of the Robiyson- Patman Act (15

US.C.A. §13a), and/asks treble damages, 415. In Count

Syplaintiff reallegeS the facts pertaining.to the destruc-

tion of his busYness of selling nursery lamps, invokes _

the court *s juvisdicticn on the basis of. diversity, of citiz- .

enship, ‘am asks for damsges under the .commen law.

Count. 3 is a common law cause of action for inducing

_ the breach of plaintiff’s commission contract with Vas. -

. coloy-Ramet Corp. by ‘means. of a threatened boycott,

Count 4 is a common law. cause of ‘action for unfair. conl-

_ petition with plaintiff’s tool business. Count 5.has been

abandoneg@@‘ount 6 alleges defendant’s entire predatory

nO - sey and conduct was actionable under common law,

under practically the same legal theory as Count 2

» On motion of the defendant the jee stated in Counts

A and 2 were dismissed without leave to amend. The

claims contained in Count 3. and i in amended Count 4 are

at issue ‘in the District Court on the. answer filed by

Sears. *. : :

Plaintiff appealed from ‘the order and id dgment dis-

missing Counts 1 and 2 of the complaint without leave

to amend. The VF nth moved to dismiss’ the appeal

on the ground that the order and judgment appealed from

was not a final. or appealable order under the require-

ments. of §1291, Title 28 U. S. Code. This. Court, in 218.

. F. 2d 295, held that the order was final and sustaihed

its jurisdiction to entertain the appeal. The Supreme

gt ranted certiorari, ‘and in Sears, Roebuck & Co. ~

.. Mackey, etal, 351 US. 427 the decision of this Court .

was affirmed. | |

The question before us on ida oniiaid: is whether’ the

District Court was correct, in haldingthat-the-facts-al-_

leged in Counts 1 and 2 of the complaint do -not state, .

and could not be amended to state, a claim upon. which .

; relief can be granted. :

Ss:

ee eo

The complaint alleged “Mackey. steceeded to the owner-

ship of two- “Metalcraft” corporations, since dissolved,

- which ‘were engaged in the interstate business of making -

and selling nursery lamps; that Time Savér Tools, Inc.-

all of whose steck is owned by Mackey, was engaged in

the interstate business of manufacturing and selling ‘tools:

.that defendant -Sears is the Jargest mail: ‘order company

in the: world and also operates over seven hundred re-

tail stores, and that the annual_sales of defendant exceed

two billion nine hundred million dollars; that the ‘‘tre-

mendous: volume”. of sales gives it the power to destroy

the business and property of its small competitors and

‘suppliers through -the. actual or: threatened use of un-

reasonably low prices.-

The complaint alleged Metalcraft began selling nur-

sery Jamps to Seats and others in 1945, but in 1946 Sears

notified Metaleraft it would discontinue its purchases un-

less Metaleraft refrained: from selling nursery lamps to.

competitors of Sears, ind thereafter Metalcraft. sekd ex-

‘elusively to Sears. It further alleged that in 1949 when

Metaleraft | was “under contract ‘to supply Sears ‘with

thirty: thousand nursery lamps at a price.of $2.20 per

lamp, Sears instructed Mackey to cause Metaleraft to °

‘agree to a 20% reduction in price, and notified Mackey

that if such. reduction were refused, Sears would ruin

Mackey and Metaleraft and make it impossible for Metal-

’ eraft to continue in business. The complaint then averred

that. Mackey refused to agree to sué¢h reduction, and

Mackey then attempted to promote the sale of said lamps

- through the department stores in Milwaukee and De-

troit, but that Sears, with the specific intent of. making

‘it impossible for Metaleraft. to dispose of its product,

sent substantial quantities of lamps which it had pre-

‘viously purchased from Metaleraft for $2.20 each to Mil-

waukee and Detroit, but not to _comparable cities, to sell

in‘its- retail stores at-94-cents each: at theésame time

' Sears listed these lamps in two ‘of -its catalogues at a

price of 84 cents, and. obtained a cheap imitation -of

Metalcraft ’s hits which it misrepresented in it® adver-

pes

2: a

pee. gets o

, : ea

tising as beinc lamps manufactured by plaintiff. . The

‘complaint avers that the purpose and intent of said sales

‘ helow cost and such gmisrepresentation and unfair com-

petition was te destrey the market for. Metaleraft’s prod-

_uets, and that Sears succeeded im such efforts.

The complaint further avers that about September 1,

1951, Mackey entered into a contract with Vascoloy-

Ramet Corporation to pramote the sale of tools and

other products for which he was to be paid.g commission

of 5°.*That after receiving commissions: Fxceeding $5,- --

000.00, Sears demanded that Vascoley cease paying com-

missions fo Macker. aad advised: that unless its demands

were complied with and the commission contract ter-

tninated, Sears would refuse to make further purchases

from Vascoley of its-eustemers, and V asegloy — after -

terminated such contract.

_ The compla: , further averred that in April of 1951

Mackey invented a nove! type of boring sei for wse> with

tr,” electric drills. and that an application for a patent

thereon was pending at the time the suit was commenced.

in the spring of L952 Mackey collaborated on the develop-

ment of a new-trpe of carbide-tipped lathe bit. Time .-

Saver Tools, Inc. was formed. to manufacture and sell,

said boring set. Iathe bits and other teols. and national

advertising was used to premote the sale of same, and

Said tocl> have hecome identified with Time Saver. The

complatit further avers that-in Decembér, 1952, Sears

_ parechased -earbide-tipped lathe bits which -were copies of

the bits developed by Mackey, and that it packaged same

in practically identical so copies of plastic cases which had

Keer used" by Time Saver. There were jurther allegations

asserting an attempt by Sears to-palm off its “product for. .

those manufactured and sold by Time Saver. The com-\

plaint then makes the general allegation that the acts ©

~and practices set forth in the complaint were performed.

pursuant to its continuing_plan to destroy each and every

business in which Mackey was engaged, or-might attempt

to engage, and that the purpose was to discipline small

suppliers and small competitors of Sears so that they

would accept any terms that might be dictated by Sears.

= .

MEN.

' a ka AL _ —5a—

The complaint charged that “eompetition. among persons .—

whe sup py products of-the kind Sears pure chases for

resale “ti ater been unreasonably restrained. - .

— + Seetion tof the Sherman Act provides: ‘Every con-

~ tract, cembination in the form of trust or otherwise, or

conspiracy in restraint of trade or commerce among the®

several states** * *’* is illegal. In the case at bar there -

is no contract in restraint of trade er commerce. No -per

-se Violation of the A+t_is alleged. Neither is there pres-

= ent- the element, of ° conspirac) y as a single corporate en-

- tity cannot ‘enter 2 conspiracy With itself. Nelsen Radio-

& Supply Co. Inc. v. Motorola, Ine.. 5° Cir., 200 F. 2d

. O11, 914: oe Publishing: Co. et al. v. United

States, 345, U.S. 594, 626. We hold Count 1 of the com .

* plaint did not state a claim under 41 of the Sherman. Act.

We do not think United States v. New. York Great At-

-lantie & Pacific Tea Co.. 7 Cir., 173 .F. 2d 79 i$ contra,-

; The question there was whether a conspiracy charge

would properly lie where separate and distinct corporate.

entities were controlled by interlocking diréctorates, and‘

where various individual defendants -were involved in

jomt activities, 9° es

45 Section 2 of the Sherman Act prov ides: EK very person

~ who shall monepolize, or attempt to monopolize,: or com-

2 bine or conspire with any ‘other. person or-ptrsons, to

, monopolize any part of the trade ‘er commerce among the,

states, or with foreign nations, shall be deemed guilty

*s @er,

-of a misdemeanor :

£ Section 2 thus outlaws three practices: \f attempt to

‘monopolize; 2) combination or conspiracy to manopolize

and 3): monopolization. ‘‘In order to fall within §2, the

monopolist must have both the powet to monopolize, and

the intent to monopolize.’’ United States vo Aluminum

\- Co. of America, et al., 2 Cir, 148 F. 2d: 416; 432.

- The complhint herein does. recite an intent by Sears

.. . to destroy any -business in which the plaintiff might en-

* - gage and thereby instill fear“in its other suppliers, but

+ \ that allegation: cannot be twisted into a charge that Sears

1 This shuhonaant quoted and approved — the Supremp?-. “Court in,

: American Tobacco Co. et al. v. United States, 328, U.S. 781, 814.

c —ta— | o

was attempting .to monopolize the’ market. in’ nursery

lamps.

Furtliermore, the complaint does not ‘allege a dinneeben

probability that defendant may —— & monopoly.

Swift and Company v. United States, 196 U.S. 375, 396;

Lorain: Journal Co: et al. v. United States, 342 US. 148,

153. The allegation that Sears’ total: annual business |.

exceeded Two . Billion Nine Hundred Million Dollars

“ives no information as to Sears’ volume in the nursery

lamp business, either nationally or: locally. As the’: trial

- court pointed out, there is no factual statement showing: ae"

the alleged predatory practices have, to the slightest ex-

tent, lessened competition in the field of activity in which

the plaintiff is engaged. We think the trial court stated

‘the situation well in these words: ‘‘* * * The actions taken

“tm ruin the plaintiff.-an discipline suppliers may be

weprehensible but there is not the slightest showing of

impending monapoly other than ‘the bafe assertion of the

pleader.’? We hold Count 1 of. the complaint did not state

a-claim under §2 of the Sherman Acts

Section 3 of the Robitison- Patman Act, 15 U S.C. §13a, .

"provides in part: “Tt shall be unlawful for angr person .

ertgaged | in commerce, in the course of such commerce,‘

* * * to sell-* * * goods in any paprt of the United States

-at prices lower: ‘than those’ exacted. by said: person else-

where in the United States for the” purpose of. destroy-

* ing competition, or eliminating a competitor in such part

of ‘tle United States; or to sell * * * yoods at unreason-

ably low prices for the, purpose of SE competi-

tion or eliminating a competitor.”’ :

The pertinent allegations of the. ‘peeved: are, Sears

‘sent-lamps which it had purchased from. Metalcraft to

Milwaukee and Detroit, although not to other comparable

cities, for sale below cost, and. with-the specific intent of

‘making it impossible for Metalcraft to dispose of its prod- :

- ucts, and as a direct result of Sears’ acts, Metaleraft be-

came insolvent; (Par. 14). Sears induced suppliers of.

lathe-bits to sell-the bits to Sears at pricés lower than

the prices charged Time Saver; (Par. 20). Sears ° sold

<than elsewhere fér the purpose of destroying competi-— .

a >. ;

‘ = S13 Mi : .

tools in some parts of the United States at lower prices

tion from Mackey or Time Saver, (Par. 21).-

‘Defbndant Sears argues, that unless defendant became.

a manufacturer of: lamps or unless: plaintiff became. a’

retailer of merchandise, Section 3 of the Robinson-Patiman zs

Act. does not ‘apply. Sears insists that - when the statute”

speaks of destroying sompetition and -eljmindting-« :

a petitor, it means that both parties must be in ‘the. same

classification.. Sears asserts a retailer’s conduct cannot:

he actionable if it smerely déstroys competition. among

suppliers. : as . ,

We think the statute eontains no suc h “‘definition® ° as

that described by Sears. This Court affirmed: a recovery

by the plajntiff—Exhibitor against -the. defendants—dis- ~

tributors. in ‘Miheaukee -Towne Corporation. v. Loew’s

ine.. 7th Cir: 190 F. 240561; The Supreme Court held

that. the conduct of the distillers which: restrained eom- ~

petition -among wholésalers.. was actionable under ‘the

Sherman Act; Kiefer-Stewart:Co. v. Joseph E. Seagram

& Sone, luc... 340, US. 211. Furthermore, the complaint

alleges Sears’ eliminated competitidn atthe’ retail level -

for it interfered with the sale of plaintiff’s lanmps, through

department’ stores in Milwaukee dnd Detroit, and also -

imitated - the packaging of plaintiff's tools. “in : order tor.

take: advantage of Time Saver’s ‘national adv értising. and

~ other promotional efforts: We think - Sears’ ‘conduct as

alleged in the complaint Was unreasonably anti-competi-

tive in ‘both purpose and effect, and that a, claim upon

“which relief can be. granted i is stated ‘under Section sof

the, Robinson-Patman Act provided that a private cause

..of action can exist under’ that Section. Defendant does

contend that private actions for treble @lamages’ are not

‘maintainable . under’ Section 3 of. the: Robin#a-Patman -

Act. However, this important point is very lightly touched -

. upon in the briefs. ae .

There have been no Supreme Court or Court of ra

peals. decision on this point in any. case where the issue.

wats" mn agmately - raised and argued. There is, _hoWever, a

a . pa

* : . .° .

’

ie tt ae a

G .

conflict of authority in the District. Sots. The leading

case. which holds. such a cause of action dees exist is

Balien Ice Cream Co. Inc. v. Arden Farms Co. et al., 94

I. Supp. 796 (DC Calif. 1950). The leading case to the

cantrary is Vance v. Safeway Stores,.137 F. Supp. 841 ~

(DC-N. Mex. 1956). However, this question is thoroughly

examined and decided:in the case ,of Nashville Milk Com-

pany V. Carnation: Company now pending -in this Court,

in an opinion being filed simultaneously with this epinion.

- For the reasons therein stated, -we hold that ‘a private Z

cause of action -may not be shaintained under Section. 3

of the Robinson-Patman Act.-It follows the trial court -

was correct in dismissing Count od of the ¢éomplaint. —

Count 2 of the complaint. incorporates by reference the

id allegations of paragraphs .12, 13 and 14 of Count 1. It”.

asgerts diversity of citizenship, and _ plaifttiff\ contends

_ =the facts set forth a common Jaw cause of ‘action.

Price cutting in. and of itself has not heen regarded

as pnlawful under the common law. Hershel California

ney Products’Co. v. Hunt Foods, Inc., 111 F.Supp. 732,

(DC Calif.) ; Schine. Chain- Theatres, Ine. et al vu

T athe States, 334 U.S: 110, 120. But there are well estab- —

lished exceptions to the rule as where price eutting has

heen combined with acts of. unfair competition such as’:

false of misleading advertising and also where it can be .

inferred: the price cutter, Was motivated by malice. -See

Nims U ‘nfair Competition. dnd Trade- marks, 4th Ed. Vol.

If, Sec. 300; p. 975. - .

“We think the complaint sufficiently alleges intentional ©

destruction .of plaintiff’s business without justifiable ex-.

cyse and based upon malice of .ill-will. This constitutes

# cause of action under the common law. Original Ballet

Russe v. Ballet Theaire, 2 Cir., 133 F. 2d_187, 189. See

also, Boggs AL Duncan-Schell Furniture Co., 163 Towa

- 106, 143. NW. 482. The Iowa court: quoted from the opin-

ion in Doremus v. Hennessey, 176 ‘lil. 608, 615, 52 N.E.

- 924,926: “** * * an act maliciously done, with: the intent _

and purpose of injuring another, is not lawful competi-

tion.’

s .

The trial court Was in error in dismissing Count 2 of |

the complaint.

This, cause iss remanded for proceedings i in, “conformity.

With: this opinion, —

‘ - @ Ge. /

Asvmuen in, part, Reversep in part, and Reaanpep.

' Costs of this appei ul to be. divided. equally bétween the.

.| .. . parties. ae: 2

— -

— Te ° ;

. Usrren States District Court

Chicago 4 eee

: | Ec reee al May 12, 1994 _.

Re: Bruce-A. Mackey, individually, and Time Saver Tools, | —

_ Ine., an Illinois corporation, v . Sears, Roebutk & |

Co., a. New .Y ork corporation

5B C 1240

~ MEMORANDUM.

_ The issues in this case arise on the defendant’ s motion

to: dismiss the complaint, except Count Ill, to which an

. answer has been filed. ; /

The complaint is brought by Brice ies ry Time

Saver ‘Tools, Inc., a corporation, against Sears, Roebuck |

_ & Co. and consists of: six Counts. he, Ser tos ;

— Count V is brought under Section 2(f) ofthe Rebinsoa-

Patman Act (15 U. S..C. Sec. 13¢f)) interdicting. the re-

ceipt of a srohibited price discrimination. This’ Count: is

~~ admittedly deficient under Automatic Canteen Co.-v. Fed-

~~ eral Trade Commission, 346. U, ¥ acy Gevided: since the

complaint was filed. :

Count. I presents: a claim for treble: damages ander - the

anti-trust laws and Counts Il, [LY and VI aver common

law causes of action. The’ statutory and the common law

claims will be considered separately. | :

The Claim ‘tor Treble Damages—Count I.

- This Count is ‘brought on behalf of Mackey alone and

_ purports to charge conduct. offending Sections 1 and-

2 ef the Sherman Act and — 3 of the Robinson- ©

Patman Act (U. S. C. Sees. 1, :2, 13(8)). The factual

allegations are as fellows: —

_ (a) + Mackey, as sole surviving stockholder, suc- -

ceeded to the ownership of all of the rights of two

“Metaleraft’’ . corporations, since dissolved, ‘which

were engaged in the interstate business of making

and selling nursery Jamps, (Par. | eo,

- (b) The plaintiff Time Saver. Tools, ‘Ine. ig en-

gaged ir ,the interstate bustness ° of manufacturing

and selling tools. All of its stock is-owned. by Mackey.

' (Par. 5) Sa pee a

(¢) Sears is engaged in general refail ‘merehan-

dising, selling nursery lamps.and tools, among other

items. It is the. largest mail order company in the

World and additionally: operates over 700 refail stores

in the United States and some foreign countries: The -

business of Sears jis interstate. Its sales are pre-

~ ently at a rate of over $2;900,000,000 yearly. The “tre-

mendous volume’” of Sears gives. it power to destroy

the. business and property of its small competitors

and suppliers through Fefusals to deal with ‘such sup-

Pliers or through the acta or. threatened use of un-

reasonably low prices. wars has used its power “to.

discipline and punish suppliers’? with the specific in-

tent to injure and destroy potential competitors who

nade purchases from such suppliers. The exercise of

such power constitutes an intent to monopolize a

part of interstate.trade and has the effect of unrea-

. Sonably restraining. competition among suppliers and,

of, coercing. suppliers of Sears to dedl with «it on:

-Sears* terms. (Par, 8-10) : “ue .

» (d) ‘Beginning | in 1949 Sears Has engaged in a

continuing attempt to destroy every business in Which ,

Mackey was engaged ‘in order to punish him for’ his

refusal to deal on Sears’ terms and to restrain oth-

evs from sinilar refusals. (Par. 11)

' (e) In 1946 Sears by threatening to’ discontinue:

its purghases caused Metalcraft to sell its nursery «

lamps exclusively to Sears. (Par. 12) . %,

(f) In 1949 Sears notified Mackey that it would

.. hot aceépt 30,000" nursery’ lamps which Metalcraft -

Was under contraé® to supply. unless the price was’ re. .

duged 20% declaring that if- the reduction were ‘re.

fused Sears would ruin Mackey and Metaleraft. (Par.

-“(g) Mackey declined accede to the price reduc-

tion and “thereupon attempted to sell the nursery

‘y

;

~®

-—12a oe

lamps through department stores in Milwaukee and

Detroit. . With the ‘infent ef despoiling Mackey-s

plans, Segrs sent substantial quantities ‘of the Metal-.

craft amps, for which it had paid: $2.20 apiece, for

- sale in Milwaukee and Détroit at 94¢, though not in -

other comparable cities. At the same time Sears

‘listed the: lamps ‘in two of its catalogs at 84¢ apiece,

supplying a cheap imitation of the Metalcraft. lamps

“to persons ordering from Sears’ .catalog representa-.

-tiow of Metaleraft’sdamp.”’ As a direct result of such

conduct, -Metaleraft became ‘insolvent and was dis-

- solved. (Par. 14) |

(h) In October 1952, while Mackey was engaged:

in selling tools for-¥Vascoloy, Sears caused Vascoloy

‘to discharge Mackey under the threat of refusing to

mike further purchases from customers of Vascoloy.

(Pan-t, te) SS , - ee rae

(i) Time Saver was formed to manufacture ‘and

‘sell certajh new type tools devised in part by Mackey.

Throug’ national advertising such tools became iden-

tified with Time’ Saver in: the market. (Par. 17)°

-(j) Sehrs is presently purchasing and selling tools

~ which are|copies*of the tools developed™by Mackey in _

plastic ‘cates which are copies of the cases used: by

Time Saver. The Sears case contains the same leg-

“end aid design on its display surface but: the words

“Craftsman” and “Sears, Roebuck and Co.” are sub-

stituted for the words “Time Saver Tools, Mundel-

ein, Ill.’ Sears’ purpose is to appropriate the mar-

ket for the tools and at the same time to. destroy

Mackey. With respect to certain tools, Sears’ con-

: duet continued notwithstanding notice of Time Sav-

er’s patent application and despite. knowledge that

“S. Sears’ copies infringe on the invention embodied in

| the patent application. (Par: 18, 19) tes

(k). Through promises of future business Sears

‘has-been able to purehase tools from Time Saver’s ~

supplier at prices lower than the price charged Time

\Saver and has séld the tools below manufacturing

—l3a— ;

cost for the purpose of appropriating the market and

_ destroying Time Saver. (Par. 20) é

. (1) Sears has ‘sold tools in some parts of the _

United States at prices lower than others for the

purpose of destroying competition from Mackey oF

. Time Saver. (Par. 21) te :

- (m) The described ‘practicés were undertaken by

Sears in order, to. destroy Mackey and constitute. an

attempt: to monopolize interstate commerce engaged

in by Mackey and small companies making sales to

Sears or which would be competitors of Sears in the

retail market. | ee .

Asa result of the alleged injustices, Mackey -demands — +

** treble damages in the amount of $570,000, together swith

incidental and injunctive relief. Time Saver. does not join-

in the prayer for relief under this Count. ~ . eee

Discussion of the Shegpian Act

So far as the Sherman: Act ‘is-concerned, it is implicit

- in the plaintiff’s. brief-that only a Section 2 violation is

urged. .No reliance is placed on Section 1. This is inev-

itable, since there is no charge ‘of combination or eon- °

Spiracy among distinct legal entitles having’ separate -eeo-

nomic motives, personal to theinselves, whieh is an indis-

pensable requisite for a Section 1 violation. |

Times-Picayune v. United States, 345 US. 594, . |

iC ee oe ae

Timken Roller Bearing Co. +. Pnited. States, 341

U. $.593, 598,606. Reem el

Nelson Radio & Supply.Cc. + Motorola, 26 F.

2d 911, 914.(C. C._A. Sth Cire. 1952). |

United States v. Yellow'Cab Co., 332 U. S. 318,

227. re

. To justify a ‘suit for treble damages (15 U.S. C. See.

15) two conditions must concur. The plaintiff must es

tablish (a) a violation of the anti-trust laws and (b) in-

jury to the plaintiff proximately resulting from the 5 =

tablished violation. - =

pee

Goodman & Son v. United Laseet Mig. Corp. .

$1 F. Supp. 890 (D. C. Mass. 1949) tog

Sunbeam Co erporation v, Payless Drugstores, 113

F. Supp. 31 (D.C. Cal. amet): nm

Nelson Radio & Supply Co. Motorola, supra.

‘The Sherman Act decries chibact unre: asonably” HL

stricting competition in the public.market and:a charge ¢ if

transgressing the statute necessarily involvés. a public

e@! as distinguished from a purely private. wrong. —

Neumann vt. Bastian Blessing Co., 70.F. Supp.:

447 (D. C. Tl. 1947, LaBuy, D. 3. ).

The factual requirements for a civil suit ‘are no léss .

severe than the requirements “for a. criminal indictment. —_

~ Plaintiff argues that it is absurd to suggest that the public’ -

has no interest in an individual who’ is heing. deliberatély

destroyed. Assuredly the thought is valid but it serves

no purpose in enlarging the scope of the statute. -

Our” initial ‘task, therefore, ‘is to determine whether

Count I sufficiently describes an offense under Section a

of the Sherman Act.

Rule 8(a) prescribes that a complaint shall include “a

short and plain statement of the claim showing that the ..

_ pleader is entitled to relief’ to which is added. the diree-

*. tion that each" averment “shall be simple, concise and di- —

rect.’ While a cause of action need not be: stated. with

the technical accuracy and completeness required at com- .

mon-law, the pleading must make it evident,. at least: in a

practical way, that the: pleader is entitled to relief.

- Commercial Banking Corp_. Indemnity Insur.

ance Com@any of Nerth America, 1 P. R.

380 (D.C C. Pa. 1940). ;

“Me broad ‘ulieiaein of the -Rules. does not rey to

justify the allegatign of a claim ‘in the words of a statute

_ and this is cepecialty true in the case of a statute like the

* Sherman Act which. defines a social and economic offense —

° : -

or j }

. —_a—

in terms of’ a general principle without specific ‘tests to |

aid in its application. ;

Louisiana Farmers’ Protective Union r. Great

. Atlantic and Pacific Tea Co., 131 Fi 2d 419 (CL°

pate C. A. 8th 1942). Ae oe

' The degree of definition required in alleging ultimate

facts varies. from one type of case to another, but invar-.

iably enough of a factual nature related to the ~ specific

occurrences constituting the claim must be- included to in-

_ dicate that a cause of avtion is at least potentially pres- +

ent. Unless this test is met, the conduct of a trial would

- be.a pointless waste of time.

: The problem, theréfore, is whether-Count “Wy viewed in

this liberal aspect, states a case—within—Section ggof the.

Sherman Act. - ’

"| Section 2 has.a dual aspect. It condemns beth the act

of monopolizing and an atter.pt to monopolize. As me

_, port for the monopoly charge, the complaint alleges that,

the defendant Sears is engaged: in generiil- retail mer-

chandising,’ selling “among other. items nursery lamps _

. and tools, and that its current’ ‘annual business exceeds

$2,900,000,000. These allegations are manifestly insufficient *

_ ~ to establish monopoly or monopoly power.

In United States rv. Colunibia Steel Comoany, 34 U.S.

495, 527, the Court said: 3 Csr Seo

“In determining what constitutes unreasonable re-

straint, we do not think the dollar volume is Of itself

of compelling significance; we Jook rather’ to the per-

‘centage of business controlled, the strength of the re:

maining competition, whether the action Springs ‘from

-. business requirements. or purpose to monopolize, the

probable development of the. industry, consumer UP-

mands, and other characteristics of the market. We

do not undertake to prescribe any set of “percentage

figures by which to. measure ‘the reasonableness of a

corporation's enlargement of its activities by the pur-

is > .

—1t—

_chase of the assets of a competitor. The relative ef-

fect of percentage command of a market varies with

the setting. in which that factor is placed. .

United States, +, United Shoe Machinery Corp.,

10 F. baciiad 295 (B.C. Mass. 1953). .

In the instant case there is no statement as” to Sears’

volume in the nursery lamp and tool, business, either na-

tionally or loeally, or. any factors relating to the éppor-

tunities of the public to purchase in a free,and unre- —

strained market. Sears’ volume in other, fields clearly ~

irrelevant.. There is no factual statement showing that_

the predatory practices, complained of have to. the slight-

est extent lessened competition in the field of activity -in

which the plaintiff was engaged. The effectiveness of ex-

“clusionary practices employed against! a single competitor

cannot be held to be monopolization where others in the

same field are‘numerous and active. The destructcion of

the plaintiff.alone would in°no sense deprive other com-

petitive entities of their market or affect the publie to _

i—any measurable extent.

eh Neumann v. Bastian- Blessing Co. bs supra.

The. other seen of Section 2 which: has pertinency is

the interdiction of an “attempt to monopolize. ”. The clas-

sical definition of Mr. Justice Holmes is immedsately- per-

tinent. In Swift & Co. v. United Ie 4 196 U. Ss." 375,

396, he said:

~. “Phe statute> gives this proceeding - against com- |

. binations in restraint of -commerce among the states

and against attempts to monopolize the same. Intent

is almost essential to such a cdinbination and is es-_

sential to such an attempt. Where acts. are not: suf-

_ ficient in themselves to produce a result which the .

. law seeks to ‘prevent—for instance, the monopoly—

but require further acts in addition to the, mere forces.

of nature to bring that result to pass, an intent to

bring it to pass is necessary in order to produce .*

dangeroes probability ‘that it will happen. “Common-

—

45 ,

—lTa-- cd

wealth -v. Peasleé, 177 Massachusetts 267, 272. But

_When ‘that intent and the consequent -dangerous® prob-

ability exist;this statute, like many others and like the

common law in some cases, directs itself against that

dangerous probability as well ne paren the campleted

> result.”’

This definition has fexsitea recent approval.

i ry < Lorain: Journal v. United States, 342. U. S. 143,

> 198.

Since the onaiaie makes no showing. that Sears had

achieved an -actual monopoly or had attained monopoly

power jn the field and in the area. in-which the: piaintiff

waz engaged, it becomes pertinent to inquire. whether the

predatory practices described coupled with the éeonomic

strength possessed by Sears imply “an-intent to monop- -

olize a part of interstate trade” and afford evidence of. a

dangerous probability that a monopoly will ultimately be

accomplished.. The complaint can be searched in vain for

- any factual-or near factual allegations that bring any such”

convietion to the mind.

- Specifically: the defect in the complaint is the absense of

any causal connection between the destruction of the plain.

-tiff and his. corporations and the disciplining of Sears’

‘suppliers’on the one hand, and the elimination or de-

grading of general competition in the areas of- business

£ s

- in which Sears and the plaintiff had a common interest on_

the other hand.. The actions taken’ to ruin the plaintiff

and discipline sapphers may be reprehensible but there

is not the slightest showing of impending monopoly other

- than the bare assertion of the pleader.

It is true that an offensive monopoly need-not. be nation-

wide. It may indeed embrace only a smail locality. As

stated by Mr. Justice Reed in United States: v. Columbia —

“Steel Co., 334 U. S. 495, 519: ~ !

“The Sherman Act is not limited to dimisating 2 re-

straints whose effects cover the entire United States. .

We have consistently held that where the relevant

tt a ees

competitive market covers only a small area the Sher- —

_ man Act/may be invoked to prevent unreasonable re-

straints within that area.”

United States r. Yellow Cab Co., 332 U.S 8.

Gameo Ine. r. eos Fruit & Produce oe.

iM F. 2d 484 (C. C. A. Ist 1952), where the

- monopoly peer within the confines of a

single building. :

‘However, the charge that Sears declan the plaintiff in

Milwaukee and Detroit is not sufficient to establish any de- _

_- structive effect on the competition in those areas or any

exclusionary practices.

Price cutting in itself is not inherently uniawful.

Sehine Theatres ¢. United wees ea 334 U. _S. 110,

120. .

These i ts ae dinesasies Sears and the plaintiff were the

~ only vendors of nursery lamps in the two cities or any allu-

- sien to the ‘financial strength or weakness-of any other

‘competitors who may have been engaged in those markets,

or indeed any other allegations des¢riptive of a com-

petitive situation in which the public interest was in-

velyed. All of the factual allegations emphasize the. plain-

tiff hs the primary object of Sears’ destructive, intent. .

Both ‘sides ‘converge upon United States v. New York

d4jreat Atlantic and Pacitie Tea Company, 67 F. Supp. 626

(D.C. IL. 1946), affirmed 173 F_ 2d 79, as being the most

closely related decision. The defendant asserts that this

case stands alone as sustaining a monopoly charge where

no- dominating control of the market was proved, yet de-

iendant offers. no citations to autheritative cases where |

the decision has been eritieized, limited or rejected. It is

not necessary to justify this decision, although 1 it is easily _

defensible and undoubtedly sound. So far as the case re- -

lates to Section 2 of the Sherman Act, it was presented to

_ the court as an attempt te create a partial monopoly and a

conspiracy between the principal defendant and its ds- _

* "~~ soeiated companies was charged. There was no contention

\ iw «

- | rg oa — 19a

that an actual monopoly had been eccouiflished a and there-

for’ the decisioggwas- based upon a different .aspect. of

Section 2 from the group of cases,\stressed by the de-_

fendant, in which the Supreme Court\ has’ measured the

percentage of the business transacted ‘by the offending

corporation im i aia field of competition. The

court found that where, in Spite of a declaration of in-

. hocence of purpose the “conscious acts of a group are

'.. such as inevitably to work undue restraint of trade or a

monopoly, in whole or \in part, the actors thereby: bring

_about transgression of the congressional rulo“of conduct.’’ »

_ .(p. 676. Emphasis supplied.) The court concluded that.

| A -& PS = plan of action consisting of numerous and

divers - restrictive practices inevitably and inherently. -

tended to restrain tradé and create a partial monopoly.

Even though some one or all of the acts of A..& P.

standing alone might net amount to a Violation of ak

‘“‘when coupled and inextricably interwoven ‘with the —

+ activities of Acco, (such actions) reflect’ inevitably the

misuse of defendants’ power in competition with others to

“such an -extent as to create undue interference with com-

merce—undue restraint of" eee such a character as |

to result in monopoly.” /

The separate and successive ficts af the defendant fact-

_ ually recited in the first Count weré invariably directed

toward. the viumination of the plaintiff alone, and therefore

bear no real analogy to the impairment of the ~public

interést proved i in the-A. & ®. case. ;

The ¢ dares of the’ Stleruanin Act violation comminttee sus-

‘tained. - Be Sak.

| The Claim: Under Section 3 of the. ; ; iS ft:

Robinson-Patman Act (15 U.S. C.18(a))

The - second anti-trust violation’ seriously urged | ‘is an

offense under Section 3 of the. Robinson-Patman Act. So

far as pertinent, this séction provides: *—

_ _ _ Sit shall be unlawful for any person * * * to ais.

1 eriminate in. price between different purchasers of

commodities.of like grade and quality, “ * * wkere the

eS?

_ _

effect ‘of such discrimination may be al:

to lesson competition gr tend to create a monopoly

in any line of commerce, or to injire, destroy, or

prevent competition with any person who either grants

or knowingly seceives the benefit of such discrimina- .

tion, or with. customers of either of them * ¢ °.”” |." >

_ The pertinent alle -zatiqns of the complaint are: .|_

ra (a). Pa kagraph 14, Sears sent lamps. which it. had’

* purchased from Metalcraft’ to’ Milwaukee. and Detroit,

+ though not to other is aecpaness cities, for sale below. :

cost.

_ than the prices charged ‘Time Saver.

(ce) Paragraph 21: Sears’ sold tools in some parts

of the United States af lower prices than cae e

- for the purpose of destroying, competition fro ac-

key or Time Saver.

“a the light. of what ‘io been said aie the dineusilon’

that which specifies that price discrimination is unlawful |

if tt tends to injure, destroy er prevent competition with |

the person who grants or receives the benefit of the dis-

crimination or with the customers of either. To ‘succeed

. plaintiff must bring himself within, the defined ‘area of

competition in order to show. that he has been injured as

a result of an infraction of the section.’

Goodman’ & Son v. United 2 ES Mig. Corp.

supra. ©

Nelson Radio & Supply Co. v. Motorola, nok;

Sunbeam Corporation v. Paylens Drag Stores,

supra.

Manifestly Maékey was-not a person who granted or

received any, prive concession ora customer of Séars or

its customers\_This. disposes of ‘the allegations: in Pare-

graphs 14 and 21 wi asennad : . a

~(b) Paragraph 20. Bears . indueéd ‘suppliers of.

‘lathe bits to sell the bits to Sears at prices lower

—

The dinion ii Fasenls 20 Ge. ng common supplier g ~

lathe biti sets to Sears and: Mackey. sold to Sears at a

lower’ price - than’ Time Saver is irrelevant—sihce Time ‘

. Saver is not a party plaintiff. to- Count J. Further, the -.

supplier .of the bits—not- Sears—is the offender described

by the statute, and if any such cause of ction is’ sustain-

able the supplier should necessarily be joined as a primary. «

‘ party defendant. Finally, the emasculated allegations -of

Section 20 hardly conform even to the simple pequiret ments |

‘Counit 11—Cémmon Law Canse of Actin.

Maekey is the ‘sole ‘party plaintiff in Count Tl. Plaine.

tiff seeks to justify this Count,;as a common ‘law action y

for the intentional , and deliberate destruction of the.

plaintiffs’ businesses, accomplished through a planned ~

program which, the plaintiff savg, must: be considered as

- & connected. whole. -The action, therefore °; sounds, in tort.

The substential facts alleged are (1) ° Sears. induced »

- Metaleraft to sell its nursery lamps. to Sears. exclusively,

(2) Sears refused to accept lamps which Metalcraft. Was |

under. contract to supply Sears a a 1 denfithd price re-*~

ductions under: threat that. Sears wotld: ruin, Mae ‘key and

Metalcraft if: the reduction svére refused, and (3) Sears _

soli Metalcraft the lamps below cost in, Milwaukee and

_ Detroit constituting, markets which: Mete ‘leraft was at-

tempting to develop. sk ete eae ee

tee corporation has the right to seiect,its « itbetie and,

to refuse to sell its products for any Te rygn whatsoever.

Times-Pitayune v. United States, ’

- gupra eee

Nelson Radio & Supply. Co: ev. Motorola,

supra” .

} *

- The right, arbitrarily to. refuse to deal with or purchase

from anyone. should be: equally immune ‘from. attack or

criticism.

Count. 1V—Common La

————

‘Price cutting is not. inherently unlawful.

i: # Schine Theatres wv United States,

supra, at 120° . |

United States x. New York Great Atlantic &

Pacific Tea Co., \ eae at ;

mera at@ =. OU

audulent practices are “alleged. The sole” impro-

priety ¢ rged is that Sears notified. Mackey. he would

be: ruined Nf he refused to ‘accede ‘to a price reduction.

Such purpose not identifiable in some objective way with

‘render. the conduc actionable.

) ction for Unfair Competition’

This Count Ws - ‘brought bt Tiume ‘Saver as the sole .

plaintiff.. The essence of the ‘chugge is that Sears was

guilty of unfair competition in that Ss ied unpatented

tools ‘(applications for patents were pe ¢) and the

’ ease in which. the tools were presented to the pitblic which

were designed. and offered for sale by Time Saver, ‘the:

words “Craftsman” and “Sears, Roebuck & Co.” were

‘imprinted on the package offered to the public “hy Sears.

oy . be 4

. Suffice it to say that the complaint contains no allega-

tions from which’ it could- be concluded that any reason-

ably intelligent ‘and alert ‘member of ‘the public, was’ de-

ceived-into purchasing Sears’ tools believing they were the

products of Time Saver. ‘a ph ae

: ‘se

Plaintift relies upon several cases of which Quaker

Oats Co. v7 General Mills, Inc.,°134 ‘F. 2d 429, devided - “

in this Circuit is: typical. Two excerpts ftom Judge Min-

_ton’s opinien make it unmistakably clear that the claimed

cause -of action cannot . he sustained. At page 431 the

court said:

“The plaintiff was bound, tq use ingen care

in thesnarketing of its product. to see that the publie -

was informed of the source thereof, and to so iden- |

tify its:préduct-as to make it remdily distinguishable

from the defendant's product.” ie uk. ®

; es oes — 23a —

And again at Page 432 eustts

“The —_ in marketing its goods, is not bound

‘to make them “foolproof”, so that no one can make a

mistake in atte thereto.”

‘Unless it were ideas that the plaintiff’: s product. ed .

acquired a secondary meaning identifying the product

with the plaintiff, there wwould be no basis for asserting

that the public was misled even though the package and .

its contents offered by Sears were. ‘identical with that of Es

_ Time Saver. Count IV i is also deficient, in this respect.

Count ViI—Omnibus Count at tanasion hese

This Count is brought“ by Mackey, alone. In effect it

duplicates all of the’ preceding Counts exe ept Count |

and charges the practices of Sears were performed in

furtherance: of its aa to destroy Mackey . and his bus-»

inesses. S Ves

In view of the position herein expressed on ( ‘ounts il,

IV; and_V, obviously most of the allegations are super-

fluous and .at -best background ‘or evidentiary. material.

‘The defendant concedes that that portion of Count VI

which duplicates Count. III is-sustainale. | The defendant

has sought the elimination of neither Count II] or Count

VI on the basis of duplication. No charge or prejudice .

to the defendant, if both Counts: are permitted to stand,

has been urged and none is pereeivable. Under these cir-

cumstances and in view of this court's liberal attitude

on questions of pleadings, the motion to strike C ount Vi

is denied. aa oe St am aoe: oe

The problem as to Whether an

‘Amendment Should-be Allowed

This case has been, argued extensively and with great ,

skill. Taere is nothing in. the pleading to indicate. that .

any supplemental allegations would establish a monopoly

or “monopoly power by Sears in the field and localities in

which. the ‘plaintiff conducted his several businesses; or

that the oes wrongful praca of Sears affected the

<a. t

: er — 24a —

‘open and public market in such a way as to lay a foun-

dation for a supp®rtable charge of an attempt to monop-

olize. In respect to Section 3 of the Clayton Act the cir-

cumstances recited do not coincidé with the requirements

of the law. Therefore,’ leave to amend - the complaint

under the anti-trust laws will be denied. —

The allegations of Count, IT are not suggestive of prac-

tices a fuller or correct statement of which would con-

stitute a-cause of action, and therefore, leave to amend

in respect to this claim will be denied.

As to Count IV, the situation is sbnibihek: different.

Supplementing the Count with- allegations showing that

the lathe bit package. had become identified with Metal-

craft in the public mind and that the Sears package

was deceptively the same, notwithstanding the. imprint

of Sears’ own trade name, would supply the existing de-

ficiencies, and therefore leave to amend the’ claim | for.’

unfair competition would -be.in order.

In net, ‘Counts I, II, IV ‘and V will be stric ken with

leave to amend Count IV. and without leave to amend

; Counts I, lI and V. “r

. Counsel will confer and present a draft order not in-

‘ eonsistent with .the views hgpein expressed within five

davs from the date hereof.

se alia J. Hoffman

J udge

And afterwards on, to wit, the 13th day: ‘of May, 1954,

there was filed in the Clerk’s ‘offic ‘e of said*Court a certain |

Memorandum Of The Court i in words and figures following,

to wit:

ae — Ba—.

Unirep States District Court

Chicago 4»

Chambers of

Judge or

; , in 13, 1954.

Re: Brice A. ashi: individually, and Time Saver

Tools, Inc., an Illinois corporation, v. Sears, Roe-

buck & Co., a New York corporation 53 C 1240 .s

MEMORANDUM

Solem for the defendant have called. the Court’s atten-

tion to the inadvertent quotation of Section 13 instead of

Section 13a,.Title 15, U. 8S. C., appearing on page 9 of the

memorandum filed by the Court on May 12, -1954. The

memorandum is therefore amended: to provide for the

substitution of Section 18a for Section 13, as follows:

“Tt shall be unlawful for ‘any person engaged in

‘commerce,: in the course of such commerce, to be a

party to, or assist in, any transaction .of sale, or

contract to sell, which discriminates to his knowledge

against competitors of the’ purchaser, in that, any

discount, rebate, allowance, or advertising service

charge is granted’.to the purchaser over and above

any ‘discount, rebate, allowance, or advertising serv-

ice ‘charge available at the time of. such transaction

_*te said competitors in respect of a’ sale of goods of

like grade, quality, and.quantity;. to sell, or contract

to sell,’ goods in any part of the. United States. at .

prices lower than those exacted by said’ person else-

‘where in the United States for the purpose -of de-

stroying competition, or eliminating a competitor in

such part of the United States; or, to séll, or contract

to sell, géods at -unreasénably low prices for the pur-

pose of destroy! ing competition or eliminating a com-

petitor.” .

Julius J. Hoffman

Judge —

— 26a —

“APPENDIX B.S

Section 1 of “ey Clayton a (15 U. S. C. §12) :

-Be-it enacted hy the Senate and House of Repre-

sentatives of the-United States of America in Con-.

- gress Usse mbled, That “antitrust laws”, ‘as used here-

in, includes the Act entitled “An Act to protect,trade

and .commerce against unlawful restraints and. mon-

opolies”, approved July second, eighteen hundred and .

ninety; sections seventy-three ‘efo. seventy-seven, in-

’ elusive, of an Act entitled “An Aet to reduce taxation, -

to. pravide revenue for the Government, and for other

purposes’’, of .August twenty-seventh, eighteen hun-.

dred. and ninety-four; an Act entitled “An Act to .

amend sections seventy-three and seventy-six of the

Act’ of August twenty-seventh, eighteen hundred and

ninety-four, entitled ‘An Act to reduce taxation,- to

- provide: revenue for the Goverment, and for other |

purposes’ ”’, approved February twelfth,:nineteen' hun-

_dred and thirteen; and alsé this Act.

Section 4 of the Clayton Act (15 U. S. C. $15):

Sec. 4. That.any person who shall be injured in his

' sbusiness or yroperty by reason of. anything foFbidden

in the antitrust laws may sue therefor in any district

court of the United Stajgs in the district in which the

- defendant resides or is found or has an agent, without

respect. to the amount in controversy, and shall re-

cover. threefold the damages by him sustained, and

the cost of-suit, including a reasonable attorney’ s fee.

Section 3 of” the Robinson- Patman Act” (15 U. S. G.

§18a): :

See. 3. - It shall be unlawful for any person iia

in commerce, in the course ‘of such commeree, to be a

party to, or assist. in, any transaction df sale, or

contract to sell, which. discriminates to hi¢ knowledge

aguiont competitors of the purchaser, i in n that, any dis-

ae i. a —

count, rebate, allowdnee,or-advertising service charge '

is granted:to the purchaser over dnd above any-dis-

count, rebate, allowance, or advertising*service: charge

available at the time of such transaction to said com- -

| pétitors ‘in respect of a sale of goods of iike grade,

quality, and quantity; to sell, or contract to sell, goods.

in any part of the United States” at prices lower than

those exacted by said person —— ‘in, the Uaited

States for the purpose of destroyMg competition, or

eliminating a competitor in-such part ef the United -

States; or, to sell, or contract to sell, goods at un-.°

reasonably low prices’ for the purpose of destroying

competition or eliminating a competitor.

.- Any person vidlating any of the provisions of this

séetion shall, upon conviction thereof, be finéd not.

more than $5,000. or ifipri soned not more than one.

vear, or both. zs)

Section 1 of the Sherman ‘Act (15 U.S.C. $1):

Sec. 1. Every contract, combination in ‘the form of

trust or- otherwise, oF conspiracy, in restraint of trade

“or conimerce among the several States, or with foreign

nations, is hereby declared to be illegal * * ~ Every

person who shall make any contract “or engage in any

combination or conspiracy hereby declared to. be illegal

shall be deemed gyilty of a misdemeanor, - and, on

conviction thereof, shall be punished by fine not ex-

~ ceeding $5,000,-or by imprisonment not exceeding one

year, or by both cai punishments, in the a

; of the court. ~~ ¢ : 4

‘Section 2 of the Sherman Act (15 U:S.C. §2):

Sec. 2. E ivery. person who shall monopolize, -or at-

‘tempt to monopolize, or combine .or conspire with any

other person or.persons, to monopolize any .part of

the trade or cOmmerce amon# the several States, or

with foreign nations, shall be deemed guilty of a mis-

demeanor, . and, on conviction thereof, shall be pun- .

' ished by fine not exceeding five ‘thgysand dollars, or by

imprisonment not exceeding one F€ar, or by both: said

punishments, in the discretion of the court.

oe, hae

- APPENDIX C.

Unirviv Srares Counr or Appgats |

Tentu Crscuir

No. 5366—Septembe r Tern, 1956

~ Harry V. Vance, Trustee in Baak-)

son, Bankrupt, . | Appeal from the

, ee - Appellant, United States Dis-

chat trict Court for -the

- District of New

Safeway Stores, Incorporated, a} Mexico’. .

corporation, _

Vv.

é Appellee. |

@ —

(November 6, 1956)

Before Huxmayx, Murnau and Pickett, Circuit Judges.

Pickett, Circuit Judge.

_ .The Trustee in Bankruptey for Frank Melvin Thompson

‘brought this action against Safeway Stores, Inc., to re-

cever treble damages under.§3 of the Robinson-Patman

Act, (15 U.S.C.A. §15a).'" The complaint is ‘based solely

~~ f ad ‘ "2 . .

'$18a reads as fellows:.

“Discrimination in rebates, discounts, or advertising sérvice- charges;

underselling in particular lacalities; penalties. hi :

“It shall be unlawful for any person engaged in commerce, in the

course of such commerce, to he a party to; or assist in, any. transaction

of sale, or contract to sell, which discriminates to his. knowledge

' “against competiturs of the purchaser, in that, any- discount; rebate,

allowance, or advertising service charge is granted to the purchaser

over and above any discount, rebate, allowance, or advertising ‘Service

charge available at the time of such transaction to said -competitors ~

in respect of a sale of goods of like. goods, quality, and quantity; to ~

sell, or contract to sell, goods in any part-of the United States at prices

lower than thost exacted by said peyson elsewhere in the United States

for the purpose of destroying competition, or eliminating a competitor

in such part of the United States; or, to sell, or contract to sell, goods

at unreasonably low prices for the purpose of destroying competition

or eliminating a competitor. ; iss

“Any person violating any of the provisions of this section shall,

upon conviction thereof, be prea NE ee ee

not more than one year, or both. @ 19,. #936, c. 592, $3, 49 Stat. 1528.”-

* forbidden in the antitrust laws may sue “therefor

“eign Maren tp

— 29a —

upon violations .of the second and third clauses of §3,

wherein it is alleged that-Safeway made sales.at unreason-

ably low prices and térritorial discrimination in prices for -—

- the purpose: of’ injuring competition to the damage of_

Phompson, who at the time was in the retail grocery busi-

ness in Albuquerque, New Mexico. It suffices to say that

the allegations, if true, constituted violations of §3. The

‘trial court expressed doubt as to the constitutionality of

_ .. §3, but chose to base its conclusion on a holding that the —

section was no part of the antitrust statutes of the United

States, and dismjssed the action on the “ground that a.

civil action for ‘treble damages was not. available to a

private litigant under 15 U.S.C_A. $15. We do not agree

with this conclusion.

15 U.S.C.A. $15 was iiaied in the ‘Clayton Xet (38

Stat. 730),-and provides that “any person who shall be in-

jured in his business! or property. by reason of anything

and shall recover threefold the damages by him sustained,

* * *” together with reasonable attorney’s fees and costs.

-The Clayton Act defined ‘‘antitrust laws” as designated

statute. existing ai the time. Upon codification this section

became 15 U.8.C.A. §12, and defined “antitrust Jaws” as-

sections 1-27 of Title 15. It is comtended that §13a_ was

not one of those antitrust laws as defined’ in §1 of the

Clayton,-Act andethe codifiers | could nét amend the law ~

iheluding it in §12. This“is no doubt. true if §3 is

separate act. The code is only prima facie evidence of

the law, and the language of the original statute controls.

Act creating U.S. Code, U.S.C.A. Vol. 1, p. 4; Stephan v..

United States, 319 U.S. 423; Murrell v.. Western Union Tel.

Co, 5 Cir, 160 F.2d 787. If, however, §3 is-in fact an

| amendment to the Clayton Act, it was properly desig-

nated in the codification. To be an amendment to an exist- |

ing law, the statute need not be so labeled. A law. is

- amended when igs permitted to: remain and something

-° ig-added or taken from it-or is in some way changed or —

altered to better accomplish its purpose. United-States v.

Lapp, 6 Cir., 244 Fed. 377; Balian Ice Cream Co. ¥, Arden

Farms Co., 94 F. Supp. 796.___——

ss #2? .

. — 30a —

- + eo ee - Ot *,

In holding that §3 was not en amendment to the Clavton-

Aet but a separate Act for which a civi! remedy was not

available to the plaintiff under §15, the trial court relied

_ - to a large extent-upon the legislative history of the Act. .

Safeway here insists that the history sustains the trial

court, while the Trustee maintains the opposite view. We -

think a study of the cOmmittee reports, the discussions

ard debates on the Robinson-Patman. Act, both in the -

House and Senate, leads to the conclusion that it was gen-

* erally understoed at the time that §3 of that Act was

supplementary and amendatory of the antitrust laws and

that in addition to the criminal sanctions, an- injured

party could recover treble damages under the provisions

of the Clayten Act. The Act dealt exélusively with the

subject matter of the existing antitrust laws. It was‘a

continuation of the Congressional attack upon the evils of

‘eombinations,, monopolies and restraints of trade and

_commeree designed to stifle competition. In cach instance

“Congress was déaling with competition which it sought

to. protect, and monopolies which it sought to prevent”.

Standard Oi Co. v. United States, 340 US. 231, 249;

Staley Mfg. Co. v. Federal Trade Commission, 7 Cir, 135

F.2d 453. The title to the Act states that it is an act to

amend §2 of the Clayton Act, and for other purposes,

but the enacting clause recites only that (2 “is amended .

to read as follows: andthe entire vr tear Pasay Act

follows, although the first section, designated as §2, is in

quotation marks, while the last three sections are not. We

do not think that failure to include the last three sections

im quotation marks has the significance which the trial

court gave to it, beeause these sections are not referred

_ to in any other manner than in the enacting clause. With- _

‘out specifie language excluding these three sections from _

the enacting clause, we feel constrained to hold that they

are included thereunder and must be considered as amend-

ing the Clayton Act. — ‘

In Balian Iee~Cream Co. v. Arden Farms Co.. supra,

Judge Yankwich, im a henanah and painstaking review of

anti-trust legislation and -the authorities, concluded: that

Cee da &

ins . e-

i - 3 was an saeaiieoin of the Clay ton Act and upheld the

right of a private litigant to sue for treble damages under

§15. We adopt the reasoning and .conclusions,reached in’. _

that case.- Generally the courts which have had ‘occasion

to consider the question have agreed that the recovery of

treble damages was available to private litigants for vio-

lation of. §13a. Atlanta Brick Co. v. O'Neal, (D.C.E.D.

Tex.) 44 F.Supp. 39; A. J. Goodman ;Son v. United

Lacquer Mfg. Corp., (D.C. Mass.) $1 F.Supp. 890; Spencer

v Sun -Oi Co. (D.C. Conn.) 94 F.Supp. -408! Myers v Shell

‘Ol Co. (D.CS.D. Calif., Cen. Div.) 96 F.Supp. 670;—

- Hershel Calif. Frust Prod. Co. v. Hunt Foods, (D.C.N.D.

Calif. S.D.) 119 F.Supp. 603, appeal dismissed 9 Cir., 221 _

F.2d 797. In National Used Car Market. Inc.v. Natl. Auto ~

’ Dealers Ass’n. (D.C., D.C.) 108 F.Supp. .692, the District

‘Court was inclined to the view that §3 didnot provide

a civil remedy for damages, but did not so ho The

-action was dismissed on other grounds and Affirmed, 200.

Fd 359.

Although it was not necessary to a decision’ in the case,

the Supreme Court, in Bruce’s Juices, Inc. v. American *~

Can Co., 330 U.S. 743, 750, had this to say:

“The Act prescribes sanctions, and it does not inde

uncellectibility. of the purchase prie@ one of them.

~ Violation of-the Act is made criminal and upon con- —

viction a violator may be fined or imprisoned. 49 Stat.

1528, 15 U.S.C. §13a. Any person who is injured in, .

his business or property. by reason of anything for- -

bidden therein may sue and ‘recover threefold the

_ damages by him sustained and the costs of suit, in--

cluding a reasonable attorney’s-fee. 3S Stat. 731, 15

USC. $15." This triple damage provision to redress

private injury and the criminal proceedings to vindi-

eate the public interest are the only sanctions pro- *

vided by Congress.”

Considering the result in Moore v. Mead’s Fine Bread

Co., 10 Cir., 184 F.2d 338, vacated and remanded 340 U.S.

i aa om a

: per

; and 208 F.2d 7%, reversed 348 U.S. ‘115,? and what

that a valid po Poser for treble damages could

not be for es of ao

EN REVERSED.

£ \ ‘

7 » Cae

* \ . .

\ © =

and \ Da

> 2

a ; \ ¥

— ° . .

. | Sy

¢ \

“In the Mead Bread case, as in this case, the plaintiff contest ‘treble

damages for violations of $13a. We first sustained a dismisal of. the

complaint. Upon mandate from the Supreme Court, this judgment was

vacated and the case was tried to a py which returned a verdict in

favor of Moore for treble damages. e reversed and remanded with

-instructions to enter . nes for the defendant: The Supreme Court, -

reversed and affirmed he judgment of the District Court. Although

the question here was not raised, the court held that violations of §13a

were “included within the ‘scope "of the antitrust laws” with th ‘ght °

to treble damages, even though the victim is a local reside’ .d no

interstate transactions were used to destroy it. :

This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.