Brandeis Machinery & Supply Corp. v. Barber-Greene Co., BARBER-GREENE

• Decision Date: 24 September 1974
• Docket Number: No. 73-2058,BARBER-GREENE,73-2058
• Parties: 1974-2 Trade Cases 75,248 BRANDEIS MACHINERY & SUPPLY CORP. and State Equipment Company, Plaintiffs-Appellees, v.COMPANY, Defendant-Appellant.
• Court: U.S. Court of Appeals — Sixth Circuit

Page 503

503 F.2d 503

1974-2 Trade Cases 75,248

BRANDEIS MACHINERY & SUPPLY CORP. and State Equipment Company, Plaintiffs-Appellees, v. BARBER-GREENE COMPANY, Defendant-Appellant.

No. 73-2058.

United States Court of Appeals, Sixth Circuit.

Argued April 4, 1974.

Decided Sept. 24, 1974.

William C. Murphy, Aurora, Ill., for defendant-appellant; Reid, Ochsenschlager, Murphy & Hupp, Aurora, Ill., Stites, McElwain & Fowler, Louisville, Ky., on brief; Lambert M. Ochsenschlager, Timothy J. Reuland, Aurora, Ill., T. Kennedy Helm, Jr., Louisville, Ky., of counsel.

Wesley P. Adams, Jr., Louisville, Ky., for plaintiffs-appellees; Bruce L. Montgomery, Tom Scheuneman, Washington, D.C., on brief; Arnold & Porter, Washington, D.C., Ogden, Robertson & Marshall, Louisville, Ky., of counsel.

Before CELEBREZZE, McCREE and ENGEL, Circuit Judges.

PER CURIAM.

This appeal pursuant to 28 U.S.C. 1292(a)(1) is taken by defendant Barber-Greene Company from the issuance of a preliminary injunction preventing it from terminating a fifty year distributorship and refusing to sell its asphalt products to plaintiffs Brandeis Machinery and Supply Company and its affiliate State Equipment Company.

The preliminary injunction was issued in a suit brought by Brandeis and State against Barber-Greene alleging that the latter had participated in an illegal tying arrangement in violation of Section 1 of the Sherman Act, 15 U.S.C. 1, and Section 3 of the Clayton Act, 15 U.S.C. 14.

The Supreme Court has defined tying arrangement as:

'An agreement by a party to sell one product but only on the condition that the buyer also purchases a different (or tied) product, or at least agrees that he will not purchase that product from any other supplier.' Northern Pacific Ry. Co. v. United States, 365 U.S. 1, 5-6, 78 S.Ct. 514, 518, 2 L.Ed.2d 545 (1957).

According to plaintiff-appellees, the illegal conduct claimed here arose when Barber-Greene refused to continue to sell Brandeis its dominant asphalt products line (the tying product) unless Brandeis agreed to distribute exclusively Barber-Greene's less popular Telsmith line of stone-crushing equipment (the tied product). When Brandeis, a multiproducts distributor who had handled the Telsmith line for Barber-Greene since 1964, chose to take on the distributorship of Rexnord products, a line of stone-crushing equipment competitive with Telsmith, Barber-Greene terminated its entire dealer agreement with Brandeis and State.

Barber-Greene's principal challenge on appeal is to the district court's determination that Brandeis had shown sufficient likelihood of ultimate success on the merits to warrant the issuance of the preliminary injunction. Barber-Greene relies upon the right of termination reserved to it in its agreements with appellees, and claims that it engaged in no more than a simple refusal to deal, held not actionable in United States v. Colgate, 250 U.S. 300, 39 S.Ct. 465, 63 L.Ed. 992 (1919). Brandeis, on the other hand, relies upon that line of more recent cases which hold the Colgate doctrine not to be applicable where the manufacturer's actions 'go beyond mere announcement of his policy and the simple refusal to deal, and he employs other means to effect adherence' to his demands. United States v. Parke, Davis & Co., 362 U.S. 29, 44, 80 S.Ct. 503, 512, 4 L.Ed.2d 505 (1960). See also Federal Trade Commission v. Beech-Nut Packing Company, 257 U.S. 441, 42 S.Ct. 150, 66 L.Ed. 307 (1921); Osborn v. Sinclair Refining Company, 324 F.2d 566 (4th Cir. 1963).

Before reaching a decision to grant preliminary injunctive relief, the district judge heard three days of testimony, and in addition...