Burge v. BRYANT PUBLIC SCH. DIST. OF SALINE COUNTY, LR-C-79-442.

• Decision Date: 25 August 1980
• Docket Number: No. LR-C-79-442.,LR-C-79-442.
• Parties: James BURGE, Plaintiff, v. BRYANT PUBLIC SCHOOL DISTRICT OF SALINE COUNTY; Otis Hardin d/b/a Skipper Photos of Little Rock; Davis/Pack Associates, Inc.; and Henington Studio of Wolfe City, Texas, Defendants.
• Court: U.S. District Court — Eastern District of Arkansas

520 F. Supp. 328

James BURGE, Plaintiff, v. BRYANT PUBLIC SCHOOL DISTRICT OF SALINE COUNTY; Otis Hardin d/b/a Skipper Photos of Little Rock; Davis/Pack Associates, Inc.; and Henington Studio of Wolfe City, Texas, Defendants.

No. LR-C-79-442.

United States District Court, E. D. Arkansas, W. D.

August 25, 1980.

G. Steven Napper, Napper, Wood, Hardin & Grace, North Little Rock, Ark., for plaintiff.

Theodore L. Lamb, Bob Scott, Little Rock, Ark., for defendants.

MEMORANDUM OPINION

WOODS, District Judge.

PRELIMINARY STATEMENT

Plaintiff filed his complaint (October 10, 1979) and amended complaint (June 20, 1980) alleging violations of the Clayton Act as amended by the Robinson-Patman Act (Title 15 U.S.C. § 13). Specifically, plaintiff alleged that the defendants violated subparagraph (c) of 15 U.S.C. § 13.

The defendant Bryant Public School District is a nonprofit, tax-supported public school system. Each school year the district requires certain photography work to be done, and this is generally described by the district as school-day pictures and senior pictures. The completed photography, as well as being sold to individual students, is used by the school district in various ways, including wall decorations and the preparation of the school yearbook. (See Affidavit of Edward Love attached to defendant district's Motion for Summary Judgment.) In determining what photographer will handle these two photography projects, the school district allows photographers to submit bids to the district for approval by the school board. As a part of these bids, the school district informs the photographers that the successful bidder will have to discount or pay to the school district a ten percent (10%) "commission" based on the orders of the students. Additionally, the school district requires that the successful-bidding photographer provide certain photography services over and above the taking of individually posed student photographs. (See defendant Bryant School District's photographic service bid instruction sheet, which is Exhibit 3 to the answer of defendant Bryant School District.)

The plaintiff alleges that the ten percent "commission" combined with the requirements set forth in the Bryant School District bid specification sheet referred to above violate a fiduciary duty owed to the students of Bryant School District and that the same has diminished competition among the various photographers, all in violation of the Robinson-Patman Act. As an affirmative defense to these allegations, the defendants allege that the Nonprofit Institutions Act, 15 U.S.C. § 13c exempts them from application of the Robinson-Patman Act.

All parties have moved for summary judgment pursuant to Rule 56 of the Federal Rules of Civil Procedure, alleging that there are no issues of material fact to be decided. The Court agrees that the dispositive facts are not in controversy and therefore will proceed to a consideration of the questions of law governing this case.

THE ROBINSON-PATMAN ACT

The pertinent provisions of the Robinson-Patman Act alleged to have been violated by the defendants are:

(c) It shall be unlawful for any person engaged in commerce, in the course of such commerce, to pay or grant, or to receive or accept, anything of value as a commission, brokerage, or other compensation, or any allowance or discount in lieu thereof, except for services rendered in connection with the sale or purchase of goods, wares, or merchandise, either to the other party to such transaction or to an agent, representative, or other intermediary therein where such intermediary is acting in fact for or in behalf, or is subject to the direct or indirect control, of any party to such transaction other than the person by whom such compensation is so granted or paid.

Where the commerce requirement is met, any payments, whether referred to as brokerage or "commissions", are unlawful whether or not there is any adverse impact on competition. To this extent, 15 U.S.C. § 13(c) is an example of per se rule. However, payments which take the form of rebates of part of the purchase price can be characterized in some circumstances as indirect discrimination requiring proof of an adverse impact on competition before a Robinson-Patman Act violation could be found. (Sullivan, Law of Antitrust § 226, 1977 ed.) However, for the purposes of deciding the pending summary judgment motions, this distinction should have no effect and therefore will not be considered by the Court.

The defendants rely on 15 U.S.C. § 13c as an affirmative defense. This statute provides as follows:

Nothing in sections 13 to 13b and 21a of this title, shall apply to purchases of their supplies for their own use by schools, colleges, universities, public libraries, churches, hospitals, and charitable institutions not operated for profit.

The immediately preceding statute is popularly referred to as the Nonprofit Institutions Act. Apparently it was enacted to prevent the Robinson-Patman Act from unduly burdening charitable institutions attempting to operate at the lowest possible cost.

On numerous occasions, the United States Supreme Court has ruled that the antitrust laws (including the Robinson-Patman Act) were to be construed liberally while exceptions from their application were to be construed strictly. Abbott Labs v. Portland Retail Druggists, 425 U.S. 1, 11, 96 S.Ct. 1305, 1313, 47 L.Ed.2d 537 (1975); United States v. McKesson & Robbins, 351 U.S. 305, 316, 76 S.Ct. 937, 943, 100 L.Ed. 1209 (1956); FMC v. Seatrain Lines, Inc., 411 U.S. 726, 733, 93 S.Ct. 1773, 1778, 36 L.Ed.2d 620 (1973); Perkins v. Standard Oil Co., 395 U.S. 642, 646-47, 89 S.Ct. 1871, 1873-1874, 23 L.Ed.2d 599 (1969). In determining whether or not a particular act is immune from antitrust proscriptions, it should be borne in mind that there is a heavy presumption against implied antitrust immunities. United States v. National Association of Securities Dealers, 422 U.S. 694, 719, 95 S.Ct. 2427, 2442, 45 L.Ed.2d 486 (1975); Goldfarb v. Virginia State Bar, 421 U.S. 773, 787, 95 S.Ct. 2004, 2013, 44 L.Ed.2d 572 (1975); United States v. Philadelphia National Bank, 374 U.S. 321, 350-51, 83 S.Ct. 1715, 1734-1735, 10 L.Ed.2d 915 (1963). As the Supreme Court said in Abbott Labs, supra 425 U.S. at 14, 96 S.Ct. at 1314:

We therefore conclude that the exemption provision of the Nonprofit Institutions Act is a limited one; that just because it is a nonprofit hospital that is purchasing pharmaceutical products does not mean that all its purchases are exempt from Robinson-Patman; that the test is the obvious one inherent in the language of the statute, namely, "purchases of their supplies for their own use"; and that "their own use" is what reasonably may be regarded as use by the hospital in the sense that such use is a part of and promotes the hospital's intended institutional operation in the care of persons who are its patients. This implies the limitation and it turns the measure naturally from the purchase to the use, as § 13c requires.

Applying this mode of analysis to the present case, we must conclude that just because Bryant School District is a nonprofit institution does not mean that any and all purchases made by or through it are exempt from the Robinson-Patman Act. Paraphrasing Abbott Labs, we must determine whether or not the photographic purchases involved herein were purchases of supplies for their own use. In construing "their own use", we must determine what reasonably may be regarded as use by the school in the sense that such use is a part of and promotes the school's intended institutional operation in the overall education of its students.

In the present case, the defendants do not dispute that a ten percent "commission" was required to be paid to the school district by the successfully bidding photographer. This arrangement would appear to involve the sort of "payments" which violate the proscriptions of the subsection of the Robinson-Patman Act with which we are concerned. (As stated earlier, the Court feels it is unnecessary...