Professional Beauty Supply, Inc. v. National Beauty Supply, Inc.

• Decision Date: 27 February 1979
• Docket Number: No. 78-1229,78-1229
• Citation: 594 F.2d 1179
• Parties: , 1979-1 Trade Cases 62,485 PROFESSIONAL BEAUTY SUPPLY, INC., a Minnesota Corporation, v. NATIONAL BEAUTY SUPPLY, INC., a Minnesota Corporation, Appellant, v. LA MAUR INC., Appellee.
• Court: U.S. Court of Appeals — Eighth Circuit

Page 1179

594 F.2d 1179

47 A.L.R.Fed. 694, 1979-1 Trade Cases 62,485

PROFESSIONAL BEAUTY SUPPLY, INC., a Minnesota Corporation, v. NATIONAL BEAUTY SUPPLY, INC., a Minnesota Corporation, Appellant, v. LA MAUR INC., Appellee.

No. 78-1229.

United States Court of Appeals,

Eighth Circuit.

Submitted Sept. 14, 1978.

Decided Feb. 27, 1979.

Jane A. McTaggart, of Gainsley, Squier & Korsh, Minneapolis, Minn., for appellant; Thomas J. Squier, Minneapolis, Minn., on brief.

Robert L. Barrows, of Leonard, Street & Deinard, Minneapolis, Minn., for appellee; Charles A. Mays, Minneapolis, Minn., on brief.

Before HEANEY and STEPHENSON, Circuit Judges, and HANSON, ^* Senior District Judge.

STEPHENSON, Circuit Judge.

National Beauty Supply, Inc. (National) appeals from the dismissal by the district court ¹ of its third-party complaint against La Maur Inc. (La Maur) for failure to state a claim upon which relief could be granted. ² At this stage of the proceedings the issue is whether under any set of facts National could be entitled to contribution or indemnification from La Maur pursuant to either federal or Minnesota law. By dismissing the third-party complaint the district court held that neither contribution nor indemnification was available to National. We affirm in part, reverse in part, and remand for further proceedings consistent with this opinion.

This action was originally commenced by Professional Beauty Supply, Inc. (Professional) against National. In its complaint, Professional, a wholesaler of beauty supplies, alleged that National, also a wholesaler of beauty supplies, demanded that La Maur, a manufacturer of beauty supplies, grant National an exclusive dealership for La Maur's products in Minnesota. It was further alleged that as a result of these demands Professional was terminated as a La Maur dealer on April 2, 1973. In Count I of its complaint Professional claimed that the acts of National were done to monopolize or in an attempt to monopolize or to combine or conspire with another person to monopolize a part of trade or commerce in violation of federal antitrust law, 15 U.S.C. § 2. In Counts II and III, respectively, Professional claimed that the same acts constituted a violation of Minnesota antitrust law, Minn.Stat.Ann. §§ 325.8014, 325.8015, and a tortious interference with Professional's business relationship with La Maur.

On this appeal National states that after filing an answer and undertaking initial discovery it became apparent that Professional's entire claim was based on the alleged joint wrongdoing of La Maur and National. At that time National requested and was granted permission to file a third-party complaint against La Maur. In its third-party complaint National alleged that "La Maur solicited National to become a distributor of La Maur's products in the State of Minnesota," and that "National had no responsibility for, or control over La Maur's decision to terminate Professional." National further alleged that in the event it is found liable to Professional for violation of either federal or state antitrust laws, it is entitled to contribution from La Maur to the extent of at least one-half of the recovery. On appeal, National also argues that since it had no control over La Maur's decision to terminate Professional, it is at most secondarily liable to Professional and is thus entitled to indemnification from La Maur. Finally, National alleged that La Maur had a duty, which it failed to perform, to reveal to National the nature and extent of all business relationships between La Maur and others which might be unlawfully interfered with if National were granted an exclusive dealership in Minnesota. Thus, National claims that La Maur's failure to make such disclosure entitles it to indemnification from La Maur in the event National is found to have tortiously interfered with Professional's business relationships.

La Maur filed a motion under Fed.R.Civ.P. 12(b)(6) to have the third-party complaint dismissed for failure to state a claim upon which relief could be granted. On January 26, 1978, the district court entered an order dismissing the third-party complaint for failure to state a claim. The order was not accompanied by a memorandum opinion, but entry of final judgment was directed pursuant to Fed.R.Civ.P. 54(b). This appeal followed.

Since this matter is before the court as an appeal from the dismissal of the third-party complaint, the facts alleged in the third-party complaint must be accepted as true and the district court's dismissal upheld only if it appears beyond doubt that National can prove no set of facts which would entitle it to relief. See Conley v. Gibson, 355 U.S. 41, 45-46, 78 S.Ct. 99, 2 L.Ed.2d 80 (1957); Quality Mercury, Inc. v. Ford Motor Co., 542 F.2d 466, 468 (8th Cir. 1976), Cert. denied, 433 U.S. 914, 97 S.Ct. 2986, 53 L.Ed.2d 1100 (1977).

I. Contribution Under Federal Antitrust Law

We note at the outset that federal law governs the issue of whether there is a right to contribution in an antitrust case. El Camino Glass v. Sunglo Glass Co., (1977-1) Trade Reg.Rep. (CCH) P 61,533 (N.D.Cal.1976); Sabre Shipping Corp. v. American President Lines, Ltd., 298 F.Supp. 1339 (S.D.N.Y. 1969). ³ The traditional federal common law rule is that contribution is not available from joint tortfeasors. However, National urges that we adopt a rule which would allow contribution from joint tortfeasors in federal antitrust cases. We believe that sound policy reasons dictate such a result and accordingly hold that under certain circumstances an antitrust defendant may be entitled to pro rata ⁴ contribution from other joint tortfeasors. ⁵

To our knowledge no circuit court has directly decided the precise issue before us. ⁶ At least four federal district courts have confronted the issue and have unanimously held that there is no right to contribution under federal antitrust law. Olson Farms, Inc. v. Safeway Stores, Inc., (1977-2) Trade Reg.Rep. (CCH) P 61,698 (D.Utah 1977); Wilson P. Abraham Constr. Co. v. Texas Indus., Inc., No. 75-2820 (E.D.La. Oct. 5, 1977); El Camino Glass v. Sunglo Glass Co., supra; Sabre Shipping Corp. v. American President Lines, Ltd., supra. See also Baughman v. Cooper-Jarrett, Inc., 391 F.Supp. 671, 678 n. 3 (W.D.Pa.1975), Aff'd in part, rev'd in part, 530 F.2d 529 (3d Cir.) Cert. denied, 429 U.S. 825, 97 S.Ct. 78, 50 L.Ed.2d 87 (1976) (dictum); Wainwright v. Kraftco Corp., 58 F.R.D. 9, 11-12 (N.D.Ga.1973) (arguably by implication); Washington v. American Pipe & Constr. Co., 280 F.Supp. 802, 804-05 (S.D.Cal.1968) (arguably by implication). Nevertheless, we are not persuaded that a rule barring contribution is correct. Of the above cited cases, only El Camino Glass, supra, and Sabre Shipping Corp., supra, provide any insight into the reasoning of the court.

In Sabre Shipping Corp. v. American President Lines, Ltd., supra, the primary case authority relied on by the court was Halcyon Lines v. Haenn Ship Ceiling & Refitting Corp., 342 U.S. 282, 72 S.Ct. 277, 96 L.Ed. 318 (1952). Halcyon is a 1952 admiralty case which has been widely cited for the proposition that there is no federal common law right to contribution and that it should be up to Congress, rather than the courts, to alter the rule. E. g., Sabre Shipping Corp. v. American President Lines, Ltd., supra, 298 F.Supp. at 1344. However, the vitality of Halcyon was seriously eroded by Cooper Stevedoring Co. v. Kopke, Inc., 417 U.S. 106, 94 S.Ct. 2174, 40 L.Ed.2d 694 (1974), decided after Sabre Shipping. In Cooper Stevedoring, the Supreme Court limited the application of Halcyon to those cases where the joint tortfeasor from whom liability is sought is immune from tort liability by statute. In limiting the breadth of Halcyon, the Court stated: "(A) 'more equal distribution of justice' can best be achieved by ameliorating the common-law rule against contribution which permits a plaintiff to force one of two wrongdoers to bear the entire loss, though the other may have been equally or more to blame." Cooper Stevedoring Co. v. Kopke, Inc., supra, 417 U.S. at 111, 94 S.Ct. at 2177. The Court further stated "(s)ince (plaintiff) could have elected to make (third-party defendant) bear its share of the damages caused by its negligence, we see no reason why (defendant-third-party plaintiff) should not be accorded the same right." Id. at 113, 94 S.Ct. at 2178. As a minimum Cooper Stevedoring and earlier admiralty cases demonstrate that under certain circumstances the Supreme Court is willing to fashion a rule allowing contribution without express direction from Congress. See id. at 110-11, 94 S.Ct. 2174.

El Camino Glass v. Sunglo Glass Co., supra, relies on Sabre Shipping, and in addition discusses many of the policy reasons both for and against contribution in antitrust cases. We do not disagree with much of the court's discussion but do take exception to its conclusion that "(w)hile the above arguments in favor of permitting contribution are persuasive, the court concludes that on balance the ends of justice will be better served by holding that contribution is not available in an antitrust suit." El Camino Glass v. Sunglo Glass Co., supra, Trade Reg.Rep. (CCH) at 72,112.

From an examination of La Maur's brief and the El Camino Glass and Sabre Shipping cases we discern five principal reasons advanced in support of the rule not allowing contribution. First, it is argued that it was the intent of Congress to exclude contribution. The essence of this argument is that since Congress put provisions for contribution in certain sections of the Security Acts of 1933 and 1934, but not in the Antitrust Acts, there was congressional intent to not allow contribution in antitrust cases. Furthermore, Congress has not acted in the face of the longstanding common law rule against contribution or the lower court decisions which hold that contribution is not available in antitrust cases.

We initially note that the...