Bay City-Abrahams Bros., Inc. v. Estee Lauder, Inc.

• Decision Date: 17 May 1974
• Docket Number: No. 73 Civ. 4207 (JMC).,73 Civ. 4207 (JMC).
• Parties: BAY CITY-ABRAHAMS BROS., INC., Plaintiff, v. ESTEE LAUDER, INC., Defendant.
• Court: U.S. District Court — Southern District of New York

375 F. Supp. 1206

BAY CITY-ABRAHAMS BROS., INC., Plaintiff, v. ESTEE LAUDER, INC., Defendant.

No. 73 Civ. 4207 (JMC).

United States District Court, S. D. New York.

May 17, 1974.

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Marshall C. Berger, New York City (Hahn, Hessen, Margolis & Ryan, New York City, of counsel), for plaintiff.

Michael Malina, New York City (Ira H. Block, Kaye, Scholer, Fierman, Hays & Handler, New York City, of counsel), for defendant.

CANNELLA, District Judge:

Defendant's motion for summary judgment, Fed.R.Civ.P. 56(b), is granted and the Clerk of the Court is directed to enter judgment dismissing the complaint.

The court grants the instant motion because plaintiff has failed entirely to state a claim upon which relief may be had. No state of facts which might constitute a cause of action cognizable at law has here been advanced.¹ In order that the decision of the court, as embraced in the succeeding paragraphs, may be placed in better perspective, the court now briefly outlines the factual setting of this case. The defendant, Estee Lauder, Inc., is a manufacturer of cosmetics, toiletries and related products. It advertises and promotes these products in the United States and elsewhere and sells them to a limited number of customers for resale at retail. In or about July, 1971, defendant commenced selling its products for resale at retail to a department store located in Bay City, Michigan, known as Sams Brothers. At that time Mr. Kamel Sams was the President and principal owner of Sams Brothers.

In or about late October or early November 1972, Mr. Sams advised defendant that he intended to sublease the cosmetics department here involved, as well as other departments of the store, to plaintiff, Bay City-Abrahams Bros., Inc., effective November 1, 1972, with Mr. Jim Wolfe thereafter to act as plaintiff's representative. Upon receipt of this advice, defendant ceased further shipment of its products to the Sams Brothers store and notified both Mr. Sams and Mr. Wolfe that until such time as it had determined that the Sams Brothers store, under its new management or ownership, was a desirable account and outlet for the retail sale of the Lauder product line, it would not solicit or accept orders for Lauder products from the store and would, until further notice, consider the store's account closed.

Following these events and while this change of control at Sams Brothers was in progress, in mid-November 1972, the Wm. C. Wiechmann Company, Inc., the owner and operator of two retail department stores in the Bay City-Saginaw, Michigan area, made inquiry as to whether defendant would sell it Estee Lauder products for resale at retail. In March, 1973, full management, operation and control of the Sams Brothers store passed to the plaintiff. In July, 1973, defendant determined and announced that it would not sell its products to plaintiff, Bay City-Abrahams Bros., Inc. and that it would sell its products for resale at retail to the Wiechmann's Store located in a shopping center situated between Saginaw and Bay City. Upon defendant's refusal to reconsider this decision, plaintiff commenced the instant action.

In the present suit, plaintiff asserts three claims against Estee Lauder arising from the latter's refusal to sell its products to plaintiff for resale at retail: (1) That such refusal "constitutes an intentional infliction of injury to plaintiff by defendant without justification"; (2) That such refusal constitutes "a contract or combination in restraint of trade or commerce among the several states in violation of § 1 of the Sherman Act" (15 U.S.C. § 1); and (3) That defendant's actions deprived plaintiff of promotional payments and services provided by defendant to other retailers in violation of Sections 2(d) and 2(e) of the Robinson-Patman Act, 15 U.S.C. §§ 13(d), 13(e).

As phrased by plaintiff's counsel:

Lying at the heart of this litigation is the question of what motivated Lauder to make this decision the decision not to deal with plaintiff. The facts known to plaintiff and the documents produced by Lauder point to Lauder being motivated by a desire to retaliate against plaintiff for its discharge on December 28, 1972 of the head of its cosmetics department, Mrs. Barbara Krause. It would appear that Mrs. Krause was a close personal friend of Mrs. Elaine Watford, the Lauder sales representative for the territory including Bay City. Mrs. Krause made statements prior to her discharge that if she was discharged plaintiff would close the Lauder line. When the owner of Weichmann's called up to inform plaintiff that it was getting the Lauder line, he asked for plaintiff's opinion of Mrs. Krause as an employee. Despite an adverse recommendation, Weichmann's employed Mrs. Krause as the manager of its Lauder department.

Plaintiff's Memorandum of Law in Opposition to Defendant's Motion for Summary Judgment at 4. This assertion, together with the further facts here relevant, will be more fully explored in the succeeding paragraphs.

Proceeding then to the substantive merits of the claims asserted by plaintiff, the court turns first to plaintiff's cause of action which sounds in tort; specifically that allegation which characterizes the defendant's conduct as "an intentional infliction of injury to plaintiff by defendant without justification." Complaint ¶ 29. In this regard, it must be noted that the parties have agreed that the substantive law of the State of Michigan is applicable and controlling upon the tort issues here presented.² Plaintiff contends that the claim advanced in the first count of the complaint sufficiently states a cause of action upon either one or both of two theories of tort liability: (1) prima facie tort; and (2) intentional falsehood giving rise to damages or injurious falsehood.

THE PRIMA FACIE TORT CLAIM

Looking first to the claim predicated upon the doctrine of prima facie tort, the relevant factual assertions made by plaintiff are briefly summarized: Estee Lauder determined not to sell its products to plaintiff solely in retaliation for plaintiff's discharge of Barbara Krause as cosmetics buyer at Sams Brothers.³ On such facts, plaintiff argues that, as a matter of law, the courts of Michigan have neither accepted nor rejected the doctrine of prima facie tort and, therefore, that this court (sitting as a "court of Michigan") should apply the doctrine as it has been developed by the courts of New York.⁴

Judge Levet, of this court, has well stated the essential elements of a prima facie tort under New York law: (1) "There must be an intent to injure plaintiff, at least to the extent of infliction of wrongful harm upon plaintiff without just cause or excuse"; (2) "justification may be viewed as a neutralizing factor that overrides the intent to injure"; and (3) "damages, which must be specially pleaded." Appalachian Power Co. v. Amerian Institute of Certified Public Accountants, 177 F.Supp. 345, 349-350 (S.D.N.Y.), aff'd, 268 F.2d 844 (2 Cir.), cert. denied, 361 U.S. 887, 80 S.Ct. 158, 4 L.Ed.2d 121 (1959) (and the cases therein cited). See also, Glenn v. Advertising Publications, Inc., 251 F. Supp. 889, 906 (S.D.N.Y.1966); Beardsley v. Kilmer, 236 N.Y. 80, 140 N.E. 203 (1923); Annotation, 16 ALR3d 1191 (1967) (extended discussion of New York cases); Prosser, Law of Torts § 130 at 949 et seq. (4 ed. 1971); Forkosch, An Analysis of the "Prima Facie Tort" Cause of Action, 42 Cornell L.Q. 465 (1957); Note, Abstaining From Willful Injury—The Prima Facie Tort Doctrine, 10 Syracuse L.Rev. 53 (1958); 4 Restatement of Torts § 762 at 36.

In assessing the present state of Michigan law concerning the prima facie tort and in asserting that the courts of that state would follow the New York approach, plaintiff has erred. The Supreme Court of Michigan in Krause v. Hartford Accident & Indemnity Co., 331 Mich. 19, 49 N.W.2d 41 (1951), quoting directly from Professor Cooley's treatise on the law of torts, laid to rest, at least in Michigan, the prima facie tort, when it stated:

Bad motive, by itself, . . . is no tort. Malicious motives make a bad act worse, but they cannot make that a wrong which in its own essence is lawful. An act which does not amount to a legal injury cannot be actionable because it is done with a bad intent. 3 Cooley on Torts (4th Ed.), § 534, p. 545.

Id. at 49 N.W.2d at 44. The entire context of Professor Cooley's remarks, as made in the section cited by the court in Krause, leaves no doubt in the mind of this reader that the Michigan court intended, by the words employed, to reject the prima facie tort doctrine. Indeed, it is now a settled and accepted proposition of law in Michigan that:

Conduct which does not, either by itself or because of the manner of its exercise, constitute an invasion of the rights of another, is not tortious, however bad or malicious the actor's motives; conversely, where an act is an unprivileged invasion of rights, the absence of malice or the presence of a good motive does not render it any less of a tort.

22 Michigan Law & Practice Encyclopedia, Torts § 2 at 88.⁵

The case of Wilkinson v. Powe, 300 Mich. 275, 1 N.W.2d 539 (1942), does not, as plaintiff contends, lead to a contrary result. In that case, involving a dairy's refusal to further deal with a trucker which had, in the past, hauled milk to the dairy, the court allowed the trucker to recover upon a cause of action for tortious inducement of breach of contract with regard to a handful of farmers who were not subject to a written hauling contract with the plaintiff. The court noted that with respect to these few farmers "plaintiff certainly had an understanding with them, and there is no testimony to show that they would not have continued to employ plaintiff to haul their milk if defendants had not interfered." 1 N.W.2d at 543. In the opinion of this court, Wilkinson can be said to stand for no more than a slight enlargement of the classic boundaries of tortious inducement...