Mackey v. Sears, Roebuck & Co.

Decision Date18 January 1955
Docket NumberNo. 11225.,11225.
PartiesBruce A. MACKEY, Individually and Time Saver Tools, Inc., an Illinois corporation, Plaintiffs-Appellants, v. SEARS, ROEBUCK & CO., a New York corporation, Defendant-Appellee.
CourtU.S. Court of Appeals — Seventh Circuit

Edward I. Rothschild, Chicago, Ill., for appellants.

Herbert E. Ruben, Chicago, Ill., for appellee.

Before DUFFY, Chief Judge, and MAJOR and SWAIM, Circuit Judges.

DUFFY, Chief Judge.

The complaint 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 by Mackey. They will hereinafter be referred to as plaintiff. The complaint alleged that since 1949 Sears had directed a course of predatory conduct successively at three business ventures carried on by plaintiff: (1) by localized price-cutting, it destroyed his lamp business; (2) by use of threatened boycott, induced a breach of plaintiff's contract for commissions with "Vascoloy", and (3) is attempting to destroy his tool business by means of unfair competition.

Count 1 alleges a deliberate and announced plan by Sears to destroy plaintiff's business activities, and that such a plan is violative of the Sherman Act, 15 U.S.C.A. §§ 1-7, 15 note, and § 3 of the Robinson-Patman Act, 15 U.S.C.A. § 13a. In this count, plaintiff seeks treble damages and equitable relief under the Clayton Act, 15 U.S.C.A. § 12 et seq. Counts 2, 3 and 4 are common law counts. In count 2 plaintiff seeks damages for the intentional destruction of his lamp business. In count 3 plaintiff seeks damages for defendant's inducement of the breach of his commission contract with "Vascoloy". In count 4 plaintiff seeks damages for unfair competition. Count 5 was a claim by Time Saver under § 2(f) of the Robinson-Patman Act. However, this count was abandoned by plaintiff after the decision by the Supreme Court in Automatic Canteen Co. of America v. Federal Trade Commission, 346 U.S. 61, 73 S.Ct. 1017, 97 L.Ed. 1454. Count 6 alleges defendant's entire predatory program was actionable under common law.

Defendant moved to dismiss the entire complaint. Later, defendant filed an answer to count 3 together with an amended motion to dismiss the balance of the complaint. The District Court ordered counts 1 and 2 to be stricken without leave to amend, and found that there was no just reason for delaying the final determination of the issues raised by these counts, and directed that judgment be entered thereon against plaintiff. The Court also struck count 4 but granted plaintiff leave to amend, which was done, and this count is now at issue. The Court struck all of the allegations of count 6 except the portion which realleged the facts covered by count 3.

Plaintiff appeals from the order and judgment dismissing portions of the complaint without leave to amend. The appeal, in effect challenges the holding of the District Court that the facts alleged in counts 1 and 2 do not state, and could not be amended to state, a claim upon which relief can be granted.

Defendant moved to dismiss the appeal on the ground that the order and judgment appealed from is not a final or appealable order under the requirements of § 1291, Title 28 U.S.Code. This section provides: "The courts of appeals shall have jurisdiction of appeals from all final decisions of the district courts of the United States * * *." Certain exceptions to this rule provided in § 1292 are not here applicable.

Because of the importance of the questions raised by the motion to dismiss the appeal, we set the motion down for oral argument after briefs had been submitted. In deciding whether the District Court entered a final decision, we must interpret Rule 54(b), Federal Rules of Civil Procedure, 28 U.S.C.

Prior to September 1, 1938, the effective date of the Federal Rules of Civil Procedure, the order in this case would not have been appealable, because it did not dispose of all of Mackey's claims against Sears. Collins v. Miller, 252 U.S. 364, 40 S.Ct. 347, 64 L.Ed. 616. As orginally adopted, Rule 54(b) authorized the entry on one claim in a multiple claim suit, when the issues material to that claim and all counterclaims arising out of the same transaction or occurrence, had been determined. The validity of the rule in its original form was upheld in Reeves v. Beardall, 316 U.S. 283, 62 S.Ct. 1085, 86 L.Ed. 1478.

Amended Rule 54(b) provides: "Judgment Upon Multiple Claims. When more than one claim for relief is presented in an action, whether as a claim, counterclaim, cross-claim, or third-party claim, the court may direct the entry of a final judgment upon one or more but less than all of the claims only upon an express determination that there is no just reason for delay and upon an express direction for the entry of judgment. In the absence of such determination and direction, any order or other form of decision, however designated, which adjudicates less than all the claims shall not terminate the action as to any of the claims, and the order or other form of decision is subject to revision at any time before the entry of judgment adjudicating all the claims."

A conflict has arisen among the various courts of appeals as to the effect to be given to this rule. We find the First and Third Circuits lined up on one side holding generally that where an order has been entered by a district court judge, where, as was done in the case at bar, he makes a "determination",1 jurisdiction is automatically and conclusively conferred upon the courts of appeals to hear the appeal. However, the Second Circuit and the Court of Appeals of the District of Columbia have reached a contrary conclusion, holding, in effect, that the courts of appeals are required to make an independent determination as to whether the order in question was, in fact, a final order. This Circuit has not previously passed directly on the question, although there was discussion of the effect of the amended rule in Winsor v. Daumit, 7 Cir., 179 F.2d 475.

The first case to discuss the proper interpretation to be given to Rule 54(b) as amended was Pabellon v. Grace Line, Inc., 2 Cir., 191 F.2d 169. The panel considering this case was Judges Chase, Clark and Frank, Judge Clark writing the opinion for the Court. It was held that an order dismissing a third party complaint was an appealable order where the district court had complied with the requirements of Rule 54(b). The Court agreed that the appeal taken in that case would have been proper even prior to the amendment of Rule 54(b), but Judge Clark stated that the district court, by making a determination that there was no just cause for delay and that he was entering a final order under Rule 54(b) relieved the Court of Appeals from the task of making an independent analysis to determine whether or not the order was, in fact, final and appealable. Judge Frank, in a concurring opinion, took issue with Judge Clark's interpretation of Rule 54(b) stating that such an interpretation would render the rule invalid as beyond the statutory power of the Supreme Court.

Eight days after the decision of the Second Circuit in the Pabellon case, another panel of that court consisting of Judges Swan, Augustus Hand and Learned Hand, in Flegenheimer v. General Mills, 2 Cir., 191 F.2d 237, held in accordance with the view previously expressed by Judge Frank in the Pabellon case. The Court held that no appealable order had been entered, and decided that it was the duty of the appellate court to determine its own jurisdiction and that such jurisdiction could not be controlled by the finding of a district court judge. Thereafter, in Lopinsky v. Hertz Drive-Ur-Self Systems, Inc., 2 Cir., 194 F.2d 422, Judge Clark vigorously defended the view that he had previously expressed in the Pabellon case.

The same question came before the Court of Appeals of the Third Circuit in Bendix Aviation Corp. v. Glass, 195 F.2d 267. In that case a counterclaim was dismissed and the District Court made the requisite "determination" under Rule 54(b) that there was no just reason for delay and that final judgment be entered. The case was finally heard before the entire court sitting en banc, and it was held, with two judges dissenting, that the effect of Rule 54(b) was to render conclusive insofar as the jurisdiction of the court of appeals was concerned, the finding of the district judge that a final appealable order was being entered. Shortly thereafter the Court of Appeals for the First Circuit, in Boston Medical Supply Co. v. Lea & Febiger, 195 F.2d 853, in an opinion by Chief Judge Magruder, stated that the First Circuit was in full agreement with the...

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8 cases
  • Rieser v. Baltimore and Ohio Railroad Company
    • United States
    • United States Courts of Appeals. United States Court of Appeals (2nd Circuit)
    • June 9, 1955
    ...to the validity of the rule and that this issue is now before the Supreme Court by grant of certiorari in the case of Mackey v. Sears, Roebuck & Co., 7 Cir., 218 F.2d 295, which sustained the rule. See Sears, Roebuck & Co. v. Mackey, 348 U.S. 970, 75 S.Ct. 535. Although we have recently rei......
  • United Artists Corp. v. Masterpiece Productions
    • United States
    • United States Courts of Appeals. United States Court of Appeals (2nd Circuit)
    • March 25, 1955
    ...altogether too strict a reading of a salutary and effective rule whose over-all validity seems now well established. Mackey v. Sears, Roebuck & Co., 7 Cir., 218 F.2d 295; Bendix Aviation Corp. v. Glass, 3 Cir., 195 F.2d 267, 38 A.L.R.2d 356; and authorities cited supra.3 Hence we conclude t......
  • Mackey v. Sears, Roebuck & Co.
    • United States
    • United States Courts of Appeals. United States Court of Appeals (7th Circuit)
    • November 1, 1956
    ...order and judgment appealed from was not a final or appealable order under the requirements of § 1291, Title 28 U.S.Code. This Court, in 218 F.2d 295, held that the order was final and sustained its jurisdiction to entertain the appeal. The Supreme Court granted certiorari, and in Sears, Ro......
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    • United States Courts of Appeals. United States Court of Appeals (4th Circuit)
    • March 11, 1957
    ...lay at rest a conflict among the circuits which had been pointed out by Judge Duffy in the lower court decision, Mackey v. Sears, Roebuck & Co., 7 Cir., 218 F.2d 295, 297, 298, as to whether the District Court's entry of judgment upon a determination that there exists "no just reason for de......
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