425 F.2d 932 (3rd Cir. 1970), 17435, Tripoli Co. v. Wella Corp.

Docket Nº:17435.
Citation:425 F.2d 932
Case Date:April 27, 1970
Court:United States Courts of Appeals, Court of Appeals for the Third Circuit

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425 F.2d 932 (3rd Cir. 1970)

TRIPOLI COMPANY, Inc., Appellant,



No. 17435.

United States Court of Appeals, Third Circuit.

April 27, 1970

Argued March 25, 1969, Reargued March 5, 1970.

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Lewis H. Gold, Adelman & Lavine, Philadelphia, Pa., for appellant.

David S. Malis, Malis & Feldman, Philadelphia, Pa., for appellee.

Argued March 25, 1969

Before SEITZ, ALDISERT and STAHL, Circuit Judges.

Reargued March 5, 1970

Before HASTIE, Chiief Judge, and FREEDMAN, SEITZ, VAN DUSEN, ALDISERT, ADAMS and GIBBONS, Circuit Judges.


GIBBONS, Circuit Judges.

In this case the district court granted a motion of the defendant-appellee, Wella Corporation, (Wella), for summary

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judgment under Rule 56(b), Fed.R.Civ.P., and plaintiff-appellant, Tripoli Company, Inc., (Tripoli), appeals.

Tripoli is a wholesale distributor of beauty and barber supplies to professional beauticians and barbers. Wella is the manufacturer of a line of cosmetics, some fifty in number, including hair dyes and tints, permanent waves, hair conditioners, setting lotions and many similar products. Tripoli was for over thirty years, until the summer of 1967, a wholesale distributor for Wella. About that time Wella learned that Tripoli was engaged not only in wholesale distribution to the trade, but also, under the trade style 'The Beauty Cage' in retail sales to consumers. Wella then stopped selling to Tripoli, and this lawsuit followed.

Tripoli's complaint sought an injunction 'to require (Wella) to resume sales to plaintiff under standard commercial terms' as well as damages suffered 'by reason of the violation by (Wella) of the Clayton and Robinson-Patman Acts.' The complaint makes no reference to the Sherman Anti-Trust Act, 15 U.S.C. 1-7 (1964), and the only factual allegation, aside from conclusory statements respecting public injury, and private damage to Tripoli's business and property, is the seventh paragraph:

After approximately thirty years of the above described business relationship, defendant has refused to sell its products to plaintiff on the ground that plaintiff has from time to time charged its customers a price lower than that which defendant recommended as the resale price in the relevant market area.

That allegation has no relationship to the Clayton Act, 15 U.S.C. 12-27 (1964), or the Robinson-Patman Act, 15 U.S.C. 13 and 13a (1964). Possibly it may be sufficient to charge a violation of Section 1 of the Sherman Anti-Trust Act, even absent any allegation of conspiracy or concert of action, since, by a generous construction one could read the quoted allegation as a charge of maintaining resale prices at the wholesale level without the benefit of a valid fair trade agreement. Compare United States v. Colgate & Co., 250 U.S. 300, 39 S.Ct. 465, 63 L.Ed. 992 (1919) with United States v. Parke, Davis & Co., 362 U.S. 29, 80 S.Ct. 503, 4 L.Ed.2d 505 (1960). 1

The continued vitality of the Colgate doctrine, permitting unilateral termination for failure to adhere to suggested resale prices, need not, however, be considered, for Wella categorically denied that resale price maintenance had anything to do with the termination, and Tripoli effectively abandoned that contention.

Wella's answer asserted that the true reason for termination was not resale price maintenance, but rather, the resale to retail customers of Wella products intended for the professional trade. Wella went further; it denied that it recommended resale prices to Tripoli, and alleged that Tripoli was free to sell Wella products at any price it chose.

After Wella's answer was filed, Tripoli pursued extensive discovery. It deposed Thomas, the Wella sales manager responsible for Tripoli's territory; Bishop, Wella's general sales manager; Rosendahl, Wella's vice president in charge of sales; Haas, Wella's treasurer; Furia, Wella's credit manager; and Megerle, Wella's president. Only two of these deponents,Bishop and Haas, were asked any questions about resale prices. Both testified that Tripoli's resale prices were of no interest to them, and the matter was not pursued further. Instead, all the Wella witnesses were examined at length about the reason for termination asserted in its answer; that is, resale to non-professional retail customers. Although Wella sold to wholesale competitors of Tripoli, no depositions were taken of third parties.

We review the history of the discovery proceedings because they make it clear that the resale price maintenance

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contention was abandoned. Unlike horizontal price-fixing arrangements, which are almost certain to be closely guarded secrets, a resale price maintenance program must of necessity have been communicated to Tripoli and to other wholesalers. Thus, we are not dealing with a situation where the proofs necessary to sustain a cause of action are locked in the bosom of the alleged conspirators. No hostile witnesses thicken the plot, for if there was a resale price maintenance program for Wella's fifty products, who better than Tripoli would have that information after thirty years as a distributor. Compare Poller v. Columbia Broadcasting, 368 U.S. 464, 473, 82 S.Ct. 486, 7 L.Ed.2d 458 (1962). Moreover, Tripoli did not move for a postponement of the motion for summary judgment pending further discovery.

Charles Di Puppo, an executive of Tripoli, was also deposed. He was asked to identify certain correspondence, dealing mainly with credit. He declined to do so. Significantly, he denied receipt of an exhibit, addressed to him, D-7, marked for identification in his deposition, which is the only item in the entire record, except for the complaint, which contains any reference to resale prices. This reference is ambiguous, for the letter speaks of 'our advertised deals,' and its meaning is not explained. The addressee denied receipt of the letter. Whether or not it was received, however, Tripoli certainly had in its own possession sufficient information to come forward with an explanation relating the reference to a resale price maintenance program if such was intended. Except for Mr. Di Puppo's denial of receipt, no reference is made to the exhibit, however, in any deposition or affidavits. Whatever its meaning, it cannot on the record before us be given any evidentiary weight.

In support of its motion for summary judgment, Wella filed affidavits denying that resale pricing was the reason for termination, and asserting that termination was prompted by Tripoli's failure to comply with terms of credit and by its violation of resale restrictions imposed on Wella's products. Tripoli chose to fight on these grounds. The two affidavits which it filed in opposition to the motion for summary judgment deal with credit 2 and with resale to nonprofessional customers. There is no contradiction whatsoever, either in those affidavits or in Mr. Di Puppo's deposition, of Wella's affidavits denying the resale price maintenance allegation.

In these circumstances, summary judgment on the resale price maintenance charge was clearly appropriate. Rule 56(e), Fed.R.Civ.P., as amended in 1963, has laid to rest the rule of Frederick Hart & Co. v. Recordgraph Corp., 169 F.2d 580 (3 Cir. 1948), formerly applicable in this circuit, under which Tripoli's unverified complaint might have been sufficient to raise a fact issue sufficient to defeat summary judgment. Even in an antitrust case a party must now come forward with affidavits setting forth specific facts showing that there is a genuine issue for trial.

What Rule 56(e) does make clear is that a party cannot rest on the allegations contained in his complaint in opposition to a properly supported summary judgment motion against him. To the extent that petitioner's burden-of-proof argument can be interpreted to suggest that Rule 56(e) should, in effect, be read out of antitrust cases and permit plaintiffs to get to a jury on the basis of the allegations in their complaints, coupled with the hope that something can be developed at trial in the way of evidence to support those allegations, we decline to accept it. While we recognize the importance of preserving litigants' rights to a trial on their claims, we are not prepared to extend those rights to the point of requiring that anyone who files an antitrust complaint setting forth a valid cause of

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action be entitled to a full-dress trial notwithstanding the absence of any significant probative evidence tending to support the complaint.

First Nat'l Bank of Arizona v. Cities Service Co., 391 U.S. 253, 289-290, 88 S.Ct. 1575, 1592-1593, 20 L.Ed.2d 569 (1968).

But while it abandoned the price maintenance charge, Tripoli did not abandon the fray. Instead, it adopted Wella's theory of the reason for cancellation. Relying on United States v. Arnold, Schwinn & Co., 388 U.S. 365, 87 S.Ct. 1856, 18 L.Ed.2d 1249 (1967), Tripolic contended that Wella's policy of restricting resale of its professional beauty care products to professional beauticians and barbers, after title to those products passed to a wholesaler, is a per se violation of the Sherman Anti-Trust Act, 15 U.S.C. 1 (1964). No motion was made to amend the complaint, but the district court did, and we do, consider the merits of that contention in the light of the pleadings, depositions on file, and affidavits. Fed.R.Civ.P. 56(c).

It is clear that not all restraints in a system of distribution fall into the per se category. United States v. Arnold, Schwinn & Co., supra. White Motor Co. v. United States, 372 U.S. 253, 83 S.Ct. 696, 9 L.Ed.2d 738 (1963). Those condemned in Schwinn as per se violations were post-sale restrictions on the territory in which or the retailers to whom a...

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