Albert Pick-Barth Co. v. Mitchell Woodbury Corp.

• Decision Date: 18 March 1932
• Docket Number: No. 2648.,2648.
• Citation: 57 F.2d 96
• Parties: ALBERT PICK-BARTH CO., Inc., et al. v. MITCHELL WOODBURY CORPORATION.
• Court: U.S. Court of Appeals — First Circuit

57 F.2d 96 (1932)

ALBERT PICK-BARTH CO., Inc., et al. v. MITCHELL WOODBURY CORPORATION.

No. 2648.

Circuit Court of Appeals, First Circuit.

March 18, 1932.

Edward F. McClennen, of Boston, Mass. (Jacob J. Kaplan, of Boston, Mass., on the brief for Pick-Barth Co., Inc.; Leo S. Hamburger, of Boston, Mass., on the brief for Stuart and McDonald), for all appellants.

Claude B. Cross, of Boston, Mass. (Edward C. Park and Withington, Cross, Proctor & Park, all of Boston, Mass., on the brief), for appellee.

Before BINGHAM and WILSON, Circuit Judges, and HALE, District Judge.

WILSON, Circuit Judge.

This is an action brought in the District Court of Massachusetts under section 7 of the Sherman Anti-Trust Law, as amended by section 4 of the Clayton Act (sections 1 and 15, title 15, USCA), and is here on appeal by defendants from the judgment in that court.

By section 1 of the Sherman Act, "Every contract, combination in the form of trust or otherwise, or conspiracy, in restraint of trade or commerce among the several States, or with foreign nations, is declared to be illegal."

Section 7 of the Sherman Act as amended by section 4 of the Clayton Act provides that: "Any person who shall be injured in his business or property by reason of anything forbidden in the antitrust laws may sue therefor in any district court of the United States in the district in which the defendant resides or is found or has an agent, without respect to the amount in controversy, and shall recover threefold the damages by him sustained, and the cost of suit, including a reasonable attorney's fee."

The declaration of the plaintiff in substance alleges: That the plaintiff was engaged in interstate commerce; that the defendant corporation was one of a combination of corporations controlled by allied interests engaged in the same trade or business as the plaintiff, and constituted the largest and a dominating factor in that trade throughout the United States; that the defendants Stuart and McDonald were, prior to January 1, 1929, trusted employees of the plaintiff, having access to its records, plans, lists of customers, present and prospective, cost records, and other data; that said defendants entered into a conspiracy to deprive the plaintiff of its interstate business in its kitchen equipment and kitchen utensils, and to restrain or destroy the competition of the plaintiff with the defendant corporation in the several states; that in furtherance of such conspiracy, and by arrangement with the defendant corporation, the said Stuart and McDonald left the plaintiff's employ and entered the employ of the defendant corporation, and took with them the plaintiff's list of customers, present and prospective, cost records, plans, and other data necessary to the conduct of its said business, and also induced the other members of the trained organization and staff of the plaintiff in its kitchen equipment department to leave without notice to the plaintiff, and enter the employ of the defendant corporation; that before leaving its employ, said Stuart and McDonald secretly solicited the plaintiff's customers in behalf of the defendant corporation and did other acts to prevent the plaintiff acquiring new business, all of which the plaintiff alleges was a violation of section 1 of the Anti-Trust Act, and injured it in its business and property.

A demurrer to the declaration was filed by the defendants on the ground that the declaration set forth no violation of section 1 of the Anti-Trust Act; that no violation of the act resulted from the establishing by the defendant of a place of business in Massachusetts for dealing in kitchen equipment, and even though the defendants did engage certain of the plaintiff's employees they were not under contract with the plaintiff; and admitting the defendants did all it is alleged, it constituted no offense under the anti-trust laws, in that there was no allegation of an unreasonable restraint of interstate commerce.

This court, however, in 41 F.(2d) 148, held that the declaration sufficiently set out a conspiracy to restrain trade between the several states; that it alleged with substantial certainty that a conspiracy existed and its purpose was to deprive the plaintiff of its interstate trade in kitchen equipment and to destroy competition therein; that although each of the several acts alleged to have been done in furtherance of the alleged conspiracy might not alone constitute any federal offense, it is of no consequence if, taken together, the intent and purpose was to restrain interstate commerce. Swift & Co. v. United States, 196 U. S. 375, 395, 25 S. Ct. 276, 49 L. Ed. 518; Binderup v. Pathe Exchange, 263 U. S. 291, 312, 44 S. Ct. 96, 68 L. Ed. 308. The object and intent of the combination determines its legality. Loewe v. Lawlor, 208 U. S. 274, 297, 28 S. Ct. 301, 52 L. E. 488, 13 Ann. Cas. 815.

It is urged, however, that this court in its opinion laid down the law for the trial of the case, and to the effect that no damages could be recovered unless it was shown that any restraint that resulted from any acts of the defendants unreasonably affected interstate trade, and to the injury of plaintiff's interstate business. But the law laid down in support of a declaration on demurrer may not apply to every state of facts that may be proven under the declaration. The only issue on demurrer is whether there are sufficient allegations to support an action. Pennsylvania Mining Co. v. United Mine Workers (C. C. A.) 28 F.(2d) 851, 853. The facts proven may require an application of law in addition to that laid down in support of a declaration on the issue raised by a demurrer.

In holding that the declaration contained sufficient allegations to sustain an action, and in reversing the judgment of the District Court in sustaining the demurrer, this court held page 150 of 41 F.(2d) that: "It can hardly be said that allegations that the defendants entered into a conspiracy to restrain the competition of the plaintiff in trade and commerce among the several states, and to deprive it of its business and to obtain that business for the defendant, do not charge with substantial certainty an intent to restrain commerce and the full and free flow of interstate competition. Addyston Pipe Co. v. United States, 175 U. S. 211, 241, 242, 20 S. Ct. 96, 44 L. Ed. 136."

And again: "We think from a survey of the decisions it must be held that any combination the intent of which is to suppress competition in interstate commerce, is unreasonable, and, if put into effect, may be said unduly to obstruct trade. If a merger is formed for a lawful purpose, and through the result of increased output and decreased overhead prices can be and are reduced, and as a result a less favored competitor is unable to compete in interstate commerce, no offense results because of the lessened competition. If, however, the merger or combination can be shown to have been formed with the intent to destroy a competitor and suppress its interstate competition and the intent is accomplished, it is within the prohibition of the statute."

And, finally: "The acts complained of were all calculated to destroy the plaintiff's interstate business, as alleged, through the efforts of its old employees working against it, not only openly but secretly while in its employ, and in behalf of a competitor, which is a dominant factor in the business throughout the United States."

While at the close of its opinion as originally drafted this court said that the plaintiff could not recover if the proof showed no more than inconvenience in conducting its business and no effect upon its interstate trade, or that its losses resulted from another cause than the restraint or diminution of its interstate commerce, upon its attention being called to this statement as not being an accurate statement of the law, in view of the allegations in the declaration, it was stricken out.

The opinion of the court on the issues raised by the demurrer, therefore, should not be construed to require that in order for the plaintiff to recover it must show that its losses resulted directly from a suppression of its interstate trade, but if they flowed from any act of the defendants in furtherance of an unlawful combination with the intent to restrain interstate trade, it is sufficient to enable it to recover.

At the trial in the court below, the jury were asked to make special findings, and the following questions were submitted to them, and their answers are appended:

"Q. 1. Did the defendants or any of them conspire together to deprive the plaintiff of its business in kitchen equipment and furnishings? A. Yes.

"Q. 1 (a). If so, which of said defendants were parties to said conspiracy? A. Albert Pick-Barth Co., Inc., George A. Stuart and John J. McDonald.

"Q. 2. Was a substantial part of the plaintiff's business affected by said conspiracy of an interstate character? A. Yes.

"Q. 2 (a). If so, was the amount of such interstate business substantial? A. Yes.

"Q. 3. Were the defendants in conspiracy as aforesaid actuated by any purpose or intent to eliminate or restrict the competition of the plaintiff in interstate trade in kitchen furnishings and equipment? A. Yes.

"Q. 4. Was the business of the plaintiff in kitchen furnishings and equipment a substantial factor in the interstate trade in those commodities in New England? A. Yes.

"Q. 4 (a). If so, did the defendant's acquisition of the plaintiff's business effect an unreasonable restraint of trade? A. No.

"Q. 5. What is the amount of the plaintiff's damages sustained by reason of said conspiracy? A. $40,000."

Thereupon the plaintiff moved for a directed verdict for the plaintiff for $40,000.

The presiding judge then said:

"What I think I will do is, in view of the answer to the third question, I will let the jury return a verdict for the plaintiff in the alternative form for $40,000, and then I will take up the questions of law on...