Atlas Sewing Centers, Inc. v. NATIONAL ASSOCIATION, ETC.

• Decision Date: 16 October 1958
• Docket Number: No. 5880.,5880.
• Parties: ATLAS SEWING CENTERS, INC., a corporation, Appellant, v. NATIONAL ASSOCIATION OF INDEPENDENT SEWING MACHINE DEALERS, a corporation; Clyde A. Davies, Richard Jensen, B. P. Reese, K. B. Budd, Walter L. Zinc, Lee Tuttle and Ward Hott, Appellees.
• Court: U.S. Court of Appeals — Tenth Circuit

260 F.2d 803 (1958)

ATLAS SEWING CENTERS, INC., a corporation, Appellant, v. NATIONAL ASSOCIATION OF INDEPENDENT SEWING MACHINE DEALERS, a corporation; Clyde A. Davies, Richard Jensen, B. P. Reese, K. B. Budd, Walter L. Zinc, Lee Tuttle and Ward Hott, Appellees.

No. 5880.

United States Court of Appeals Tenth Circuit.

October 16, 1958.

Albert J. Colton, Salt Lake City, Utah (Peter W. Billings and Bryce E. Roe, Salt Lake City, Utah, were with him on the brief) for appellant.

Herbert B. Maw, Salt Lake City, Utah, for appellees.

Bernard P. Reese, Jr., Rockford, Ill., filed a brief for appellee, National Association of Independent Sewing Machine Dealers.

Before BRATTON, Chief Judge, and PHILLIPS and LEWIS, Circuit Judges.

PHILLIPS, Circuit Judge.

Atlas Sewing Centers, Inc., a Delaware Corporation,¹ brought this action against National Association of Independent Sewing Machine Dealers, a Utah Corporation,² and Clyde A. Davies, a citizen of Utah, seeking damages on three claims. Richard Jensen, B. P. Reese, K. B. Budd, Walter L. Zinc, Lee Tuttle and Ward Hott were also named as defendants, but were not served with process.

On the first claim Atlas sought damages for an alleged libel; on the second claim it sought damages for alleged civil conspiracy; and on the third claim it sought treble damages under 15 U.S.C.A. § 15, for alleged violations of the antitrust laws of the United States, 15 U.S. C.A. §§ 1-15, inc.

The Association is a non-profit corporation, whose members are retail sewing machine dealers. Davies is Executive Vice-President of the Association. The Association publishes a periodical called "The Sewing Machine News." Jensen is the editor of the periodical and is a citizen of Utah. The alleged libel set up in the first claim is predicated on an article published in the October-November, 1956 issue of such periodical, written by Davies and reading as follows:

"`You will probably receive a lot of complaints after we open up business here\', T. C. Kaplan, executive vice president, Atlas Sewing Centers, Inc. told Hendrich Romeyn, Business Men\'s Alliance (Better Business Bureau) in his Salt Lake City office yesterday.

"Mr. Kaplan called at his office, Mr. Romeyn said, to try to impress him with the bigness and strength of Atlas.

"`He showed me a printed prospectus on the financial standing of this corporation he represents. I am a man of considerable experience in stocks and bonds, and I read the report from beginning to end several times, but I\'ll be darned if I could find who owned what, and what who owned if they owned it. Many prominent names are used, which naturally impressed me, but their actual connection is left very vague,\' Mr. Romeyn said.

"`As to Mr. Kaplan\'s warning that my office will likely receive many calls from his customers, this of course only made me wonder why. If a man calls the police department and says he is going to shoot his wife, this does not make the crime any less serious when it happens.

"`Regardless of all those fancy names and nine-digited figures in his prospectus, this office will treat complaints against them on their own merits.

"`At this point we have no information, except his own, that we may expect trouble, and until we do, we will assume that Atlas will, if it opens up here as he says, operate under the rules of free enterprise and under good business judgment,\' Mr. Romeyn concluded."

The first claim alleged the foregoing facts and further alleged that Atlas is engaged in numerous cities of the United States in the business of selling and servicing sewing machines, which are purchased from suppliers, who also supply like and similar machines to members of the Association; that the published matter was wholly false and untrue and known by the Association and Davies to be false and untrue; that Atlas had demanded that the Association publish a retraction and that it had failed so to do; that as a result of the publication of such matter, various firms, persons and corporations with whom Atlas had previously been doing business and with whom Atlas had reason to anticipate doing business had refused to do business with Atlas, to its damage in the amount of $50,000; and that the publication of such matter was malicious and done with intent to damage Atlas.

The second claim alleged the necessary jurisdictional facts and further alleged that the Association, Davies, and the other named defendants "are associated together for the purpose of furthering and promoting the business of independent sewing machine dealers" and "are in league against the owners and operators of multiple stores engaged in the sale of sewing machines"; that Atlas operates "numerous stores engaged in the sale of sewing machines"; and that in furtherance of the above-stated purposes of the Association, it, Davies, and the other named defendants "did conspire, one with the other" to cause to be published in the October-November, 1956 issue of "The Sewing Machine News" the article above set forth; that the article was false and known to be false by the Association, Davies, and the other defendants and was published in furtherance of such conspiracy "to defame, injure and hurt" Atlas "and deprive" Atlas "of business to which it was justly entitled"; that the Association, Davies, and the other named defendants conspired to circulate "the false and defamatory information to the members" of the Association, with the intent that it should be used by them to induce prospective purchasers of sewing machines not to deal with Atlas; that Atlas has expended considerable sums of money in advertising to create a favorable impression in the mind of the public "for the name of" its "business and the name of" its "product"; and that as a result of the acts of the Association, Davies, and the other named defendants, various firms, persons and corporations with whom Atlas had previously been doing business and with whom it had reason to believe it would do business, refused to do business with Atlas, to its damage in the amount of $50,000; and that the actions of the defendants were malicious and intended to damage Atlas.

In the third claim Atlas alleged that it is a Delaware Corporation engaged in the sale of sewing machines and parts and in such connection purchases sewing machines from manufacturers, importers and distributors in the States of New York, Pennsylvania, Florida, Texas and elsewhere in the United States and that it owns and operates retail sales and service stores in the States of Alabama, Arkansas, California, Colorado, Florida, Georgia, Indiana, Kansas, Kentucky, Lousiana, Mississippi, Nebraska, North Carolina, Oklahoma, South Carolina, Tennessee, Texas, Virginia and Utah, and that it had a sales volume in 1956 in excess of $7,000,000; that in carrying on its business Atlas purchases, transports and sells sewing machines bearing the trade name "Atlas" in interstate commerce; that the Association is a trade association of sewing machine dealers engaged throughout the United States in competition with Atlas in the purchase and sale of sewing machines; that the Association, Davies, and the other named defendants, "through collaboration, cooperation and conspiracy have entered into a plan or scheme to unreasonably restrict and restrain the business of purchasing and selling sewing machines in interstate commerce by a program of publishing false and defamatory information about" Atlas and its "products," to induce Atlas's suppliers and customers not to deal with it, for the unlawful purpose of eliminating Atlas's competition in the purchase and sale of sewing machines in interstate commerce; that the effect and purpose of such plan or scheme "is to injure the public by the elimination of" Atlas "as a substantial supplier and dealer in sewing machines and to enable" the Association and its members "to fix and control the price and market of sewing machines in interstate commerce"; that the acts of the Association, Davies, and the other named defendants "have injured the business and property of" Atlas "by alienating its suppliers and customers and destroying the value" of Atlas's expensive advertising program in radio, television and magazines circulated in interstate commerce, "to establish in the public's mind the merit and quality of" the name "Atlas" as applied to its business and the sewing machines it markets, and that the Association, Davies, and the other named defendants threatened to continue such program of publishing and circulating such false and defamatory matter concerning Atlas, its business and its products, to the further injury and damage to Atlas.

Atlas also sought injunctive relief in each claim.

Answers to requests for admissions of fact and the deposition of Davies, taken by Atlas, established the following additional facts:

The Association prints between 5,000 and 10,000 copies of each issue of "The Sewing Machine News" and sends copies to both members and nonmembers. The alleged libelous article was published in the October-November, 1956 issue. It was written by Davies from information furnished him by Romeyn, because Romeyn felt that Atlas was an "undesirable organization to come into Salt Lake City" and that it "might be harmful to the people here the same as National Stores had been" and steps should be taken to "stop a recurrence of the National Stores deal." In a letter dated December 11, 1956, from the Association to attorneys for Atlas and signed by Davies as Executive Vice-President it was stated that the Association was maintaining files with respect to Atlas; that it had received demands from large groups that it expose the Atlas "Racket"; and that in order to protect itself it would open up its files to the public through the columns of "The Sewing Machine News."

From Davies' testimony it appeared that the Association sent out a circular letter to all of its members, seeking information with respect to complaints against Atlas; that it...