Maddock & Miller, Inc. v. MAYER CHINA COMPANY

• Decision Date: 26 April 1965
• Citation: 241 F. Supp. 306
• Parties: MADDOCK & MILLER, INC., Plaintiff, v. MAYER CHINA COMPANY, Fine China Associates, Inc., Bart Miller (formerly known as Herbert W. Mueller), William P. C. Adams, Schmid Bros. Inc., Paul A. Schmid, Shenango China Company and United States Lines, Defendants.
• Court: U.S. District Court — Southern District of New York

241 F. Supp. 306

MADDOCK & MILLER, INC., Plaintiff, v. MAYER CHINA COMPANY, Fine China Associates, Inc., Bart Miller (formerly known as Herbert W. Mueller), William P. C. Adams, Schmid Bros. Inc., Paul A. Schmid, Shenango China Company and United States Lines, Defendants.

United States District Court S. D. New York.

April 26, 1965.

Friedlander & Gaines, New York City, for plaintiff. W. Harvey Mayer, New York City, of counsel.

Milbank, Tweed, Hadley & McCloy, New York City, for defendant Mayer China Co. C. Richard Stafford, New York City, of counsel.

Simpson, Thacher & Bartlett, New York City, for defendants Fine China Associates, Inc., Bart Miller and Schmid Bros., Inc. Lawrence M. McKenna, Walter J. Josiah, Jr., New York City, of counsel.

Goldstein, Judd & Gurfein, New York City, for defendant Littlefield Inc., named as Shenango China Co. Edward Brodsky, Charles H. Kellert, New York City, of counsel.

Kirlin, Campbell & Keating, New York City, for defendant United States Lines. Louis J. Gusmano, James R. Campbell, New York City, of counsel.

LEVET, District Judge.

The defendant United States Lines and other defendants have moved this court for an order to dismiss the complaint under Rule 12(b) of the Federal Rules of Civil Procedure upon the ground that it appears on the face of the complaint that this court lacks jurisdiction of the subject matter.

This action allegedly is brought pursuant to Sections 1, 13, 15 and 26 of Title 15 U.S.C., commonly known as the Sherman and Clayton Acts.

THE COMPLAINT

THE FIRST CAUSE OF ACTION

The first cause of action is aimed at all defendants, including United States Lines. The gist of the first cause of action is as follows:

Plaintiff sells chinaware. Prior to June 1963, plaintiff supplied chinaware, manufactured by defendant Mayer China Company ("Mayer"), to the United States Lines and others pursuant to some exclusive right under a contract with Mayer.

In March 1961, defendants Fine China Associates, Inc. ("F.C.A.") and William P. C. Adams ("Adams") sought to obtain the business then being done by plaintiff, Maddock & Miller, Inc., with United States Lines while said defendants sought to sell to United States Lines chinaware produced by defendant Shenango China Company ("Shenango") which did not produce chinaware which met the standards of the United States Lines.

Thereupon defendants F.C.A., Adams, Schmid Bros. Inc., Paul A. Schmid and Shenango, it is claimed, threatened United States Lines that if it did not purchase its chinaware through F.C.A. the above-mentioned defendants would take their shipping business elsewhere and induce their affiliates to do likewise.

Under this compulsion United States Lines gave in and agreed to purchase its chinaware through F.C.A. which engaged one Bart Miller, who had formerly been employed by plaintiff and had become familiar (it is alleged) with a list of plaintiff's customers, etc. and divulged this information to F.C.A.

Then, it is further alleged that in May 1963, defendants F.C.A. and Adams advised Mayer that they had obtained an agreement to sell chinaware to the United States Lines and that they were planning to seize the remaining "hotel" business of plaintiff and that they wanted to sell Mayer's products to customers of plaintiff instead of plaintiff but at a lower price than paid by plaintiff for the same products.

Thereupon, defendant Mayer agreed, it is asserted, to sell F.C.A. the same products it had sold to plaintiff at a lower price than it was selling to plaintiff, thus discriminating against plaintiff in violation of Section 13 of Title 15 U.S.C.

The claim is then made that these acts violate Section 1 of Title 15 U.S.C. and that all defendants except United States Lines have repeated or threatened to repeat the aforementioned acts, and plaintiff has been damaged in the amount of $2,500,000.

In the prayer for relief, apparently based on the first cause of action, plaintiff seeks certain injunctive relief against defendants (other than United States Lines) in parts (a), (b) and (d); and in (c) of the prayer it asks injunctive relief against defendants' conspiring, combining or acting in concert to deprive plaintiff of its business.

SECOND CAUSE OF ACTION

The second cause of action is directed against all defendants other than United States Lines. The thrust of this cause of action as alleged is as follows:

Plaintiff had an agreement with Mayer whereby plaintiff had the right to sell products of Mayer. Mayer and the other defendants conspired to sell the same items to F.C.A. at a lower price with knowledge that these items would be resold to customers developed and serviced by plaintiff. These defendants hired Miller and one Shepherd, former employees of plaintiff, who divulged confidential information to F.C.A. and thus competed unfairly with plaintiff, thus damaging plaintiff to the extent of $2,500,000.

THIRD CAUSE OF ACTION

The third cause of action names only the United States Lines. This cause of action realleges paragraphs Eighth and Ninth of the complaint and claims that because of United States Lines' unlawful "acceptance" of rebates, the plaintiff was precluded from continuing its business relationship (with United States Lines) and by reason thereof asks damages in the amount of $500,000.

DISCUSSION

I. THE THIRD CAUSE OF ACTION

The United States Lines is sued in the third cause of action solely by reason of rebates, etc. It is the sole defendant in that cause of action.

Title 46 U.S.C. § 812 in substance prohibits rebates and discriminations by carrier by water. Section 813 of the same Title grants the Federal Maritime Commission power to determine whether there have been any violations of Section 812. Section 821 of Title 46 U.S.C. provides that any person¹ may file with the Federal Maritime Board a sworn complaint setting forth any violation of this chapter by a common carrier by water, etc. and asking reparation for the injury, if any, caused thereby.

The contention of the defendant United States Lines is that the enforcement of plaintiff's claim requires the determination of issues which Congress by a regulatory scheme has placed in the special control of the Federal Maritime Commission.

The doctrine of exclusive primary jurisdiction has been recognized by the United States Supreme Court. In United States v. Western Pac. R. Co., 352 U.S. 59, 77 S.Ct. 161, 1 L.Ed.2d 126 (1956), Mr. Justice Harlan in his opinion stated:

"The doctrine of primary jurisdiction, like the rule requiring exhaustion of administrative remedies, is concerned with promoting proper relationships between the courts and administrative agencies charged with particular regulatory duties. `Exhaustion' applies where a claim is cognizable in the first instance by administrative agency alone; judicial interference is withheld until the administrative process has run its course. `Primary jurisdiction,' on the other hand, applies where a claim is originally cognizable in the courts, and comes into play whenever enforcement of the claim requires the resolution of issues which, under a regulatory scheme, have been placed within the special competence of an administrative body; in such a case the judicial process is suspended pending referral of such issues to the administrative body for its views. General American Tank Car Corp. v. El Dorado Terminal Co., 308 U.S. 422, 433 60 S.Ct. 325, 331, 84 L.Ed. 361." 352 U.S. 63-64, 77 S.Ct. 165.

Mr. Justice Harlan further stated (p. 64, 77 S.Ct. p. 165):

"No fixed formula exists for applying the doctrine of primary jurisdiction. In every case the question is whether the reasons for the existence of the doctrine are present and whether the purposes it serves will be aided by its application in the particular litigation. * * *"

The principle of exclusive primary jurisdiction has been recognized and applied to suits brought in the courts seeking redress for alleged violations of the Shipping Act. See Carnation Company v. Pacific Westbound Conference, 336 F.2d 650 (9th Cir. 1964), in which a claim of this type was involved. A district court had dismissed the action and plaintiffs appealed. Pope, Circuit Judge, stated:

"In dismissing the action, the court below relied upon the decisions in the cases of United States Nav. Co. v. Cunard Steamship Co., 284 U.S. 474, 52 S.Ct. 247, 76 L.Ed. 408, and Far East Conf. v. United States, 342 U.S. 570, 72 S.Ct. 492, 96 L.Ed. 576. It seems plain to us that both of these decisions support and require the action of the court below." 336 F.2d 653.

The fact that the action might involve proceedings not to procure an injunction but to recover damages does not affect this principle. See American Union Transport Inc. v. River Plate & Brazil Conferences, 222 F.2d 369 (2nd Cir. 1955), affirming American Union Transport Inc. v. River Plate & Brazil Conferences, 126 F.Supp. 91 (S.D.N.Y. 1954); also see Rivoli Trucking Corp. v. New York Shipping Association, 167 F.Supp. 943 (S.D.N.Y.1957); Carnation Co. v. Pacific Westbound Conference, supra, 336 F.2d at 655.

I am, therefore, forced to conclude that the doctrine of exclusive primary jurisdiction requires the dismissal of the third cause of action in the complaint against its sole target, United States Lines.

II. THE FIRST CAUSE OF ACTION

In the first cause of action the charge of rebates is intertwined with alleged machinations of certain defendants who are in effect charged with threatening United States Lines with loss of business if it did not purchase its chinaware through F.C.A. which was demanding the special privileges from United States Lines. Thus in this cause of action the thread of the controversy is rebates.

The disposition of the first cause of action as far as the United States Lines is concerned depends on the effect, if any, of plaintiff's joining a cause of action under the Sherman Act with one triggered by a violation of rebates under Title 46 U.S.C. § 812.

The same...