200 F.2d 911 (5th Cir. 1952), 14012, Nelson Radio & Supply Co. v. Motorola, Inc.

Docket Nº:14012.
Citation:200 F.2d 911
Case Date:December 17, 1952
Court:United States Courts of Appeals, Court of Appeals for the Fifth Circuit

Page 911

200 F.2d 911 (5th Cir. 1952)




No. 14012.

United States Court of Appeals, Fifth Circuit.

December 17, 1952

Page 912

Samuel M. Johnston, Mobile, Ala., for appellant.

Thomas A. Rynolds, Calvin Sawyier and Charles E. Green, Chicago, Ill., Marion R. Vickers, Mobile, Ala., for appellee.

Before BORAH, STRUM, and RIVES, Circuit Judges.

BORAH, Circuit Judge.

This is an appeal from a judgment of the Court below dismissing an action brought by Nelson Radio and Supply Company, Inc., under Section 15, Title 15, United States Code, against Motorola, Inc. to recover treble damages for alleged violations of the Antitrust Act, as amended, 15 U.S.C.A. § 1 et seq. The cause was dismissed on the ground that the amended complaint failed to state a claim upon which relief could be granted under the Act. Thereafter, Nelson Radio and Supply indicated that it did not desire to amend its complaint further and this appeal followed.

The facts alleged in the amended complaint may be summarized as follows: For several years prior to February 10, 1949, plaintiff was engaged in the business of selling and distributing heaters, radio receivers, radio phonograph combinations, and communication equipment, together with parts and accessories therefor, sold to it by Motorola, Inc. The defendant, Motorola, Inc., is engaged in the business of manufacturing and selling this merchandise and shipping it in large quantities in interstate commerce to distributors, such as the plaintiff, located throughout the country. Through the years the plaintiff expended large sums of money to increase the sale and distribution of Motorola merchandise within its assigned territory, which encompassed certain counties in Alabama and Florida, and the business of the defendant likewise increased until it achieved a commanding position in the field.

Prior to January 2, 1948, the defendant submitted to plaintiff for its signature a wholesale distributor's agreement or franchise for the year 1948. This agreement provided, among other things, that the merchandise therein referred to should consist of hearters, radio receivers, radio phonograph combinations, and television receivers, or parts thereof, manufactured by the defendant and sold under the name Motorola but should not include defendant's communication equipment and any of defendant's articles sold under any name other than Motorola. The agreement reserved to the defendant the complete right to distribute the excluded equipment and articles within the plaintiff's territory, including the appointment of distributors therefor. This provision of the new agreement effected a substantial change, for although communication equipment manufactured by the defendant had not been specifically included in previous distributor agreements between the parties, the defendant in the past had honored sales of its communication equipment made by the plaintiff in said territory. At the time the defendant submitted this new agreement, it informed the plaintiff that the latter could not sell communication equipment manufactured by others in competition with defendant. Plaintiff now claims that it was coerced into signing the 1948 franchise agreement by threats of termination of its existing distributor agreement and the refusal to make a new one.

During the months of November and December, 1948, and the months of January and February, 1949, the parties were negotiating for a renewal of the 1948 agreement. In these negotiations plaintiff insisted that it be allowed to acquire, distribute and sell the defendant's communication equipment, or that it be allowed to sell merchandise included within the term Motorola together with communication equipment acquired from other manufacturers. The defendant resisted these demands, negotiations were fruitless, and on February 10, 1949, the defendant terminated its existing contract and refused to enter into a new contract with the plaintiff unless the plaintiff would forego its demands.

Page 913

After setting forth the facts as summarized above, the complaint contains the following allegations:

'Since November, 1947, said defendant, and Paul V. Calvin, the president and a director of defendant's corporation, and William H. Kelly, its sales manager, and its officers, employees, representatives and agents, who have been actively engaged in the management, direction, and control of the affairs and business of said defendant in and in connection with the interstate trade and commerce in said Motorola and communication equipment, unlawfully have engaged in the City of Chicago, Illinois, in a conspiracy in restraint of the aforesaid trade and commerce among the several states in Motorola and said communication equipment; and said defendant and the other persons hereinabove mentioned conspired together to do all acts and things and to use all means necessary and appropriate to make said restraint effective including the means, acts and things more particularly hereinafter alleged.

' * * * (a) on, to-wit, from November, 1947, until the 10th day of February, 1949, they advised and notified plaintiff that no longer would defendant permit plaintiff to distribute and sell communication equipment, and that if it sold or distributed communication equipment manufactured by others, that it would terminate or cancel its distributor's agreement or franchise contract made with plaintiff; (b) on the 10th day of February, 1949, it terminated plaintiff's distributor's agreement or franchise with the defendant as its distributor in said territory, because of plaintiff's refusal to agree not to sell and distribute communication equipment manufactured by others in said territory; (c) on, to-wit, the 10th day of March, 1949, it refused to sign and execute the distributor's agreement for said territory for the year, 1949, unless plaintiff would agree not to sell within said territory * * * communication equipment manufactured by others in competition with defendant's said communication equipment, which proposal plaintiff refused to agree to; and (d) on and after * * * the 10th day of March, 1949, it refused to sell and ship any further Motorola and communication equipment so manufactured by it as aforesaid to the plaintiff.'

The complaint further alleges that the defendant is selling and shipping Motorola merchandise to its other distributors throughout the United States under distributor agreements substantially the same as the agreement set forth above; that the defendant manufactures and sells more than 50% of the communication equipment manufactured and sold in interstate commerce in the United States; that its practice of selling Motorola merchandise in interstate commerce...

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