Sears, Roebuck & Co. v. Blade

• Decision Date: 16 February 1953
• Docket Number: No. 14079.,14079.
• Court: U.S. District Court — Southern District of California
• Parties: SEARS, ROEBUCK & CO. v. BLADE et al.

110 F. Supp. 96

SEARS, ROEBUCK & CO. v. BLADE et al.

No. 14079.

United States District Court S. D. California, Central Division.

February 16, 1953.

Nathan M. Dicker, Beverly Hills, Cal., for the defendants Metropolitan Engravers, Metropolitan Mat Service, and the Duffys and Smutz.

John L. Wheeler, Freston & Files and Eugene D. Williams, Los Angeles, Cal., for the plaintiff.

HALL, District Judge.

The defendants in the above entitled action are Frank R. Blade, an individual, alleged to have been an employee of the plaintiff from the years 1937 until December 1951 as Advertising Manager of the Los Angeles group of stores owned and operated by the plaintiff; Metropolitan Engravers, Ltd., and Metropolitan Mat Service, Inc., two California Corporations, the latter one of which is alleged to be wholly owned and controlled by the individuals Gregory F. Duffy, Aubrey A. Duffy, Alfred Smutz and Walter C. Duffy, who likewise are alleged to be the officers, agents and representatives of the corporation designated as Metropolitan Engravers, Ltd. Barnard Engraving Company, Inc., alleged to be a California corporation and James G. Barnard, Margaret Davis, John Doe, Jane Roe and John Doe Company, alleged to be officers, agents and representatives of the Barnard Engraving Company.

Frank R. Blade has answered.

No appearance seems to be in the file for either Barnard Engraving Co., or James G. Barnard or Margaret Davis.

Metropolitan Engravers and Metropolitan Mat Service, the three above-mentioned Duffys and Smutz have filed a motion to dismiss or for summary judgment, motion for more definite statement, motion for statement of each separate transaction, and a motion to strike.

Consideration will first be given to the motion to dismiss.

The complaint is in three causes of action:

The first cause of action is alleged to involve violations of the Anti-Trust Acts, 15 U.S.C.A. §§ 1, 4, 13(a) and 15, and jurisdiction is said to rest upon Title 15 U.S. C.A. § 15, and Title 28 U.S.C.A. § 1337; Section 15 of Title 15 being that provision of the Anti-Trust laws which gives the right to private suit for damages and Section 1337 of Title 28 gives jurisdiction in cases arising under the Federal laws regulating commerce.

The second cause of action is alleged to be founded upon violation of the Robinson-Patman Act, Title 15 U.S.C.A. § 13(a) and (c), and jurisdiction of the court is alleged to lie under Title 15 U.S.C.A. § 15, and Section 1337 of Title 28 U.S.C.A.

The third cause of action is based upon diversity only and seeks damages for alleged oppression and fraud, based upon the conduct of the defendants.

Summarily stated, the factual allegations in the complaint are these: that the defendant Blade was Advertising Manager from January 1, 1937 to December 1951 for the Los Angeles group of stores owned by plaintiff; that as such Advertising Manager he let contracts for engraving and mat service to the defendants, Metropolitan Engravers, Metropolitan Mat Service and Barnard Engraving Co.; that he received a cut-back of $400 a month for a period of time and 15% of the total price of mats and engravings at other times from Metropolitan Engravers, Metropolitan Mat Service and/or Barnard Engravers.

The plaintiff seeks in the first cause of action to recover the amount received by defendant Blade plus treble damages under the Sherman Act, 15 U.S.C.A. § 1; and in the second cause of action, an amount received in asserted violation of the Robinson-Patman Act, 15 U.S.C.A. § 13(a) and (c), plus treble damages; and in the third cause of action damages in the sum of $125,734.89 with an additional sum of $250,000 as exemplary or punitive damages from all defendants, and the sum of $18,093.04, plus $50,000, as exemplary or punitive damages from the defendants Blade and Barnard Company, as well as for attorneys' fees, costs, etc.

The only matters before the court now are the motions of Metropolitan Engravers, Metropolitan Mat Service, the above-mentioned Duffys and Smutz.

If it does not appear from the complaint that the acts and conduct set forth come within the provisions of the Sherman Act, the motion to dismiss must be granted as to the first cause of action. And if it does not appear from the complaint that the acts and conduct complained of are prohibited by the Robinson-Patman Act, the motion to dismiss the second cause of action must be granted.

The allegations concerning interstate commerce by which the plaintiff seeks to bring itself under the Sherman Act are not too extensive and briefly summarized they are: that in the course and conduct of plaintiff's business its Los Angeles group of stores engaged extensively in newspaper advertising of, and concerning the commodities which it markets and sells; that a large number of engravings and mats were designed to be, and were actually used, in newspaper advertising of said commodities; that said engravings and mats were used in newspaper advertisements in the Los Angeles Times, Los Angeles Examiner and other newspapers which are distributed not only in the State of California but throughout the several states of the Union, including particularly the states of Arizona and Nevada; "That in the course of said business of plaintiff and said defendants there is a constant, continuous stream of trade and commerce between the states consisting of the purchase, transportation, sale, soliciting for sale, advertising and delivering of commodities which are bought and sold by plaintiff and into which the engravings manufactured and sold to plaintiff by said defendants enter as a part of the over-all operation of buying, selling, advertising, transporting and delivering such commodities between the several states."

In short, the plaintiff asserts jurisdiction and liability under the Sherman Act in that it is engaged in interstate commerce and in that advertising is a part of that interstate commerce and that the advertising goes in the newspapers, which are, in turn, distributed in interstate commerce.

The question of what constitutes interstate commerce as that term is used in the Sherman Act, has been before the courts upon innumerable occasions and with a great variety of results. So much so that it is difficult, if not impossible, to find among the reported cases any readily definite standard or norm, but on the contrary each specific situation depends in the ultimate for its solution upon the particular facts surrounding such situation. For that reason it is almost useless to review the innumerable cases which have touched upon the great variety of circumstances which have been before the courts in litigation under the Sherman Act. There are, however, certain principles enunciated in the decisions which serve as something of a guide to the courts of first resort. Counsel have cited numerous cases in the briefs, but it is unnecessary for the purpose of decision to refer to all of them in this memorandum.

It is now recognized that the Sherman Act is applicable not only to "trade or commerce among the several States" but also to such trade or commerce, even though wholly intrastate in character, which may affect trade or commerce among the several states. But whether or not such intrastate activities come within the ambit of the Sherman Act is determined by the effect the particular acts may have upon commerce among the states. This latter principle is best enunciated in Apex Hosiery Co. v. Leader, 1940, 310 U.S. 469, 60 S.Ct. 982, 996, 84 L.Ed. 1311, in the following language:

"In the cases considered by this Court since the Standard Oil Co. v. U. S. case 221 U.S. 1, 31 S.Ct. 502, 55 L.Ed. 619 in 1911 some form of restraint of commercial competition has been the sine qua non to the condemnation of contracts combinations or conspiracies under the Sherman Act, and in general restraints upon competition have been condemned only when their purpose or effect was to raise or fix the market price. It is in this sense that it is said that the restraint, actual or intended, prohibited by the Sherman Act are only those which are so substantial as to affect market prices. Restraints on competition or on the course of trade in the merchandising of articles moving in interstate commerce is not enough, unless the restraint is shown to have or is intended to have an effect upon prices in the market or otherwise to deprive purchasers or consumers of the advantages which they derive from free competition. Chicago Board of Trade v. United States, 246 U.S. 231, 238, 38 S.Ct. 242, 243, 62 L.Ed. 683; United States v. United States Steel Co., 251 U.S. 417, 40 S.Ct. 293, 64 L.Ed. 343; Cement Manufacturers Ass'n v. United States, 268 U.S. 588, 45 S.Ct. 586, 69 L.Ed. 1104; United States v. International Harvester Co., 274 U.S. 693, 47 S.Ct. 748, 71 L.Ed. 1302; Appalachian Coals v. United States, 288 U.S. 344, 375, et seq., 53 S.Ct. 471, 479, et seq., 77 L.Ed. 825."

In Feddersen Motors, Inc. v. Ward, 10 Cir., 1950, 180 F.2d 519, the court held that mere injury or damage to a plaintiff only was not enough, but that a complaint must allege violation of the Act in form of undue restriction or obstruction of interstate commerce and damages to plaintiff proximately resulting therefrom, and must also allege facts from which it can be determined as a matter of law that by reason of intent, tendency, or the inherent nature of the contemplated acts, an alleged conspiracy was reasonably calculated to prejudice public interests by unduly restricting the free flow of interstate commerce. And further, that an appreciable part of such commerce must be the subject of a monopoly complaint or conspiracy.

In Brosious v. Pepsi-Cola Co., D.C.Pa., 1945, 59 F.Supp. 429, it was held that restraints, actual or intended, prohibited by the Sherman Anti-Trust Act are only those which are so substantial as to affect market prices, and that restraints on competition or on the course of trade and merchandising of articles moving in...