Bergen Drug Company v. Parke, Davis & Company

• Decision Date: 29 August 1962
• Docket Number: No. 13934.,13934.
• Citation: 307 F.2d 725
• Parties: BERGEN DRUG COMPANY Inc., a New Jersey Corporation, Appellant, v. PARKE, DAVIS & COMPANY, a Michigan Corporation.
• Court: U.S. Court of Appeals — Third Circuit

307 F.2d 725 (1962)

BERGEN DRUG COMPANY Inc., a New Jersey Corporation, Appellant, v. PARKE, DAVIS & COMPANY, a Michigan Corporation.

No. 13934.

United States Court of Appeals Third Circuit.

Argued June 7, 1962.

Filed August 29, 1962.

As Amended September 19, 1962.

Rehearing Denied September 27, 1962.

Alan V. Lowenstein, Newark, N. J., (Lowenstein & Spicer, Murry D. Brochin, Newark, N. J., on the brief), for appellant.

Gerhard A. Gesell, Washington, D. C., (Donald B. Kipp, Clyde A. Szuch, Pitney, Hardin & Kipp, Newark, N. J., William H. Allen, Covington & Burling, Washington, D. C., on the brief), for appellee.

Before McLAUGHLIN, STALEY and HASTIE, Circuit Judges.

STALEY, Circuit Judge.

On September 27, 1961, plaintiff, Bergen Drug Company, Inc., commenced a private antitrust action against defendant, Parke, Davis & Company. The complaint, as amended, contained the usual prayer for treble damages and requested a permanent injunction enjoining defendant from refusing to sell its products to plaintiff upon the same terms as they are sold to other purchasers.¹

On October 12, 1961, plaintiff received a letter from defendant which stated:

"We have concluded that we do not wish to make further use of the distribution facilities of Bergen Drug Company, Inc.

"We are, therefore, closing your account permanently, effective immediately."

Shortly before, plaintiff's subsidiaries received substantially similar letters from defendant.

Confronted with defendant's action, plaintiff filed a motion in the district court for an injunction pendente lite requesting that defendant be enjoined from cancelling or threatening to cancel the accounts of plaintiff and its wholly-owned subsidiary, from refusing to fill their orders, and requiring defendant to sell and deliver merchandise to them upon the same terms and conditions as such merchandise was being sold and delivered to competing wholesalers.

The district court, concluding that there existed no "statutory or other legal basis" for granting the injunction pendente lite, denied the motion.² It is from this order that plaintiff has appealed.³

Plaintiff contends that aside from any statutory basis, the federal courts possess a broad equity power to grant an injunction pendente lite, and that such an injunction, under the facts, should have been granted in order to avoid irreparable economic harm to it, and to prevent undue interference with the orderly litigation of the main antitrust action. Defendant says that no occasion exists for the exercise of equity jurisdiction since there has been no actual or threatened interference with the district court's jurisdiction or processes, and further, that plaintiff has failed to establish irreparable harm.

We think that the district court, as a court of equity, did possess power to issue the preliminary injunction.

This court's recent decision in Bateman v. Ford Motor Co., 302 F.2d 63 (C.A.3, 1962), helps in the disposition of this appeal. There, plaintiff, a franchised distributor of Ford automobiles, brought an action under the "Dealers Day in Court Act," 15 U.S.C.A. §§ 1221-1225, and asked for a preliminary injunction pending disposition of a claim for damages and permanent injunctive relief. The district court denied relief on the grounds that the statutory right to damages was the exclusive remedy. We reversed, concluding that the court possessed equity powers to compel the parties to continue their relationship pending disposition of the main claim. What we did there was to apply to different circumstances the equity rule that where a party performs "acts sought to be enjoined, the court may, by mandatory injunction, compel a restoration of the status quo," pending a final adjudication of the matter. Texas & New Orleans R. R. Co. v. Northside Belt Ry. Co., 276 U.S. 475, 479, 48 S.Ct. 361, 72 L.Ed. 661 (1928). The existence of such a power was recognized recently by the Second Circuit in House of Materials, Inc. v. Simplicity Pattern Co., 298 F.2d 867, 871-872 (C.A.2, 1962),⁴ and the instances where it has been applied are many.⁵ A temporary injunction to maintain the status quo has been granted although the final relief sought was legal and not equitable in nature. Chicago, M. & St. P. Ry. Co. v. Schendel, 292 F.326 (C.A.8,1923); State of Ohio ex rel. Stevens v. Industrial Commission of Ohio, 102 Ohio App. 47, 136 N.E.2d 660 (1955); Hamlet Hospital & Training School for Nurses v. Joint Committee, 234 N.C. 673, 68 S.E.2d 862 (1952). Plaintiff is not only seeking money damages in the main action but asks for a permanent injunction identical to the temporary relief requested.

What remains for us to determine is whether to remand the case to the district court so that it might first exercise its discretion on plaintiff's motion. Defendant takes the position that even assuming the power to grant temporary relief existed, it should not be exercised here because under the Supreme Court's decision in United States v. Colgate & Co., 250 U.S. 300, 39 S.Ct. 465, 63 L.Ed. 992 (1919), it had a right to refuse to deal with plaintiff, and, therefore, temporary relief must be denied. We think, however, that Colgate is in apposite here. The Colgate Company was indicted for entering into a combination with wholesale and retail dealers for the purpose of fixing resale prices. The Supreme Court affirmed the action of the district court which sustained a demurrer to the indictment on the basis that a manufacturer can specify resale prices to its wholesalers and retailers and refuse to deal with anyone who fails to maintain them without violating the antitrust laws. In the instant case, a civil action, the gravamen of the main claim is discriminatory dealing and monopolizing and attempting to monopolize which, of course, is unrelated to the resale price maintenance policy involved in Colgate.

In that case, furthermore, the Supreme Court qualified its statement concerning a seller's freedom to choose customers by indicating that the rule would not apply where there is a purpose to create or maintain a monopoly. The undisputed facts here are that the buyer-seller relationship was discontinued because of the filing of the main action. True enough, the defendant can choose customers, but it should not be permitted to do so in order to stifle the main action, especially where it is apparent that such conduct will further the monopoly which plaintiff alleges defendant is attempting to bring about and which, if proved, would entitle plaintiff to permanent relief. Lorain Journal Co. v. United States, 342 U.S. 143, 72 S.Ct. 181, 96 L.Ed. 162 (1951). The possibility that the court may decide the right to permanent relief adversely to plaintiff does not preclude it from granting the temporary relief. Burton v. Matanuska Valley Lines, Inc., 244 F.2d 647, 650, 17 Alaska 298 (C.A.9, 1957).

It is clear to us, based on the unchallenged facts in the record, that a temporary injunction should have been granted.

Private actions are an important means of enforcing the antitrust laws of the United States. Such actions are a vehicle for serving not only the immediate interests of the litigants, but the continuing interest of the public in a smoothly functioning and unobstructed system of commerce. Congress voiced its recognition of the importance of private actions by enacting special provisions for treble damages and attorneys' fees. That, indeed, weighs heavily with this court in considering whether equity jurisdiction should be exercised.⁶

Plaintiff is a "full-line, full-service wholesaler," which means that it...