Burlington Coat Factory Warehouse v. Esprit de Corp.

• Decision Date: 16 November 1984
• Docket Number: No. 83 Civ. 7393 (KTD),83 Civ. 7393 (KTD)
• Citation: 597 F. Supp. 1199
• Parties: BURLINGTON COAT FACTORY WAREHOUSE CORPORATION, Plaintiff, v. ESPRIT DE CORP. and Federated Department Stores, Inc., Defendants.
• Court: U.S. District Court — Southern District of New York

597 F. Supp. 1199

BURLINGTON COAT FACTORY WAREHOUSE CORPORATION, Plaintiff, v. ESPRIT DE CORP. and Federated Department Stores, Inc., Defendants.

No. 83 Civ. 7393 (KTD)

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

November 16, 1984.

Kassner, Haigney & Thomson, New York City, for plaintiff; Stacy J. Haigney, Denise M. Cossu, New York City, of counsel.

Kaye, Scholer, Fierman, Hays & Handler, New York City, for defendant Esprit De Corp.; Fredric W. Yerman, Richard A. De Sevo, New York City, of counsel.

Proskauer, Rose, Goetz & Mendelsohn, New York City, Arnold & Porter, Washington, D.C., Lois Thompson, New York City, G. Duane Vieth, Murray H. Bring, John Kronstadt, Mark R. Merley, Washington, D.C., Thomas G. Cody and Boris Auerbach, Cincinnati, Ohio, of counsel.

MEMORANDUM & ORDER

KEVIN THOMAS DUFFY, District Judge:

Plaintiff, Burlington Coat Factory Warehouse Corporation ("Burlington") commenced this action against defendants Esprit De Corp. ("Esprit") and Federated Department Stores, Inc. ("Federated") pursuant to section 1 of the Sherman Antitrust Act, 15 U.S.C. § 1. Defendants now move pursuant to Fed.R.Civ.P. 56 for summary judgment.

Esprit is a manufacturer of women's and children's clothing and accessories. Federated, through several divisions, sells clothing to retail customers. Two of Federated's well-known divisions are Bloomingdale's and Abraham & Straus. Burlington is a retailer of men's, women's, and children's clothing. Burlington's stores sell its merchandise at prices approximately twenty-five percent below those charged by traditional department stores such as those controlled by Federated.

Between August 1982 and March 1983, Burlington submitted eleven orders to Esprit totalling $281,708. Esprit's Appendix, Exh. A (Affidavit of Leon C. Rosenberg) at 2. On average, Esprit filled 46.23 percent of Burlington's orders. Id. It is undisputed that in July 1983, Burlington submitted three orders totalling approximately $500,000. On July 29, 1983, Esprit returned all of Burlington's outstanding purchase orders. Esprit's Appendix, Exh. B. Burlington alleges that the decision by Esprit to not fill Burlington's orders was made after and as a result of a public announcement made by Federated at a June 1983 retailers' conference. Federated apparently announced that any wholesaler who supplied off-price retailers would run the risk of losing Federated's business. See Affidavit of Norman Ross, Exh. A (press release).

Burlington alleges that Federated's announcement constituted a "threat of and an invitation by Federated to manufacturers such as Esprit to enter into an agreement and conspiracy in restraint of trade for the purpose of eliminating price competition at the retail level of the apparel market." Complaint ¶ 17. Burlington alleges also that Federated complained directly to Esprit with respect to Burlington. Id. ¶ 18.

Esprit asserts that it was neither aware of Federated's announcement nor received complaints from Federated prior to returning Burlington's orders. Esprit claims that its decision to not sell to Burlington was unilaterally arrived at and was based on a desire to promote a certain image to the public. Esprit distinguishes itself from other clothing manufacturers by claiming to promote a "concept" by featuring a complete line of coordinated clothing and accessories to be displayed together rather than by item. See Federated's Appendix, Exh. 1 (Deposition of Leon C. Rosenberg) at 59, 74-76, 93-94. According to the national sales manager for Esprit, Leon Rosenberg, Esprit is continually becoming more popular and is increasingly unable to fill a substantial portion of its customers' orders. Id. at 56, 74. Thus, Esprit began to implement a program in late 1982 and early 1983 to sell its merchandise to only those stores who would present its apparel in such a way that would further Esprit's "concept." Id. at 74. Apparently, however, Burlington utilizes a "`no frills' approach" in merchandising its goods; clothing is arranged by item on racks and fixtures. See Esprit Appendix, Exh. J (Deposition of Monroe Milstein) at 36-37.

Rosenberg stated at his deposition that he personally reviewed Burlington's July 1983 orders because they were for such a large amount. He investigated the size of Burlington's prior orders and found the July orders to be far in excess of them. Federated's Appendix, Exh. 1 at 54-57. Rosenberg then spoke with the Esprit sales representatives who took Burlington's orders. Id. at 57. After learning about the nature of Burlington's stores, Rosenberg stated, the orders were returned. Id. at 57-60, 68.

Thereafter, on August 30, 1983, a meeting was held in Esprit's New York showroom. It was attended by Rosenberg, one of the sales representatives who took Burlington's orders, Burlington's general merchandise manager, Norman Ross, and a Burlington sales representative, Elisa Kraemer. Id. at 68. Kraemer brought a tape recorder to the meeting concealed in her briefcase and the ensuing conversation was recorded. See Federated's Appendix, Exh. 2 (transcript of recording). Rosenberg explained to Kraemer and Ross that Esprit was decreasing the number of accounts it serviced and was evaluating various stores in terms of whether they presented the image that Esprit was seeking to convey. Id. Mr. Rosenberg discussed Esprit's decision to stop selling to several full price specialty store chains including "The Limited" to which Esprit had approximately $3 million in annual sales. Id. at 6-7. Federated was not mentioned at any point during the conversation.

Thus, Esprit asserts that its decision to terminate its sales to Burlington was unilateral and was based on the fact that (1) Burlington's July 1983 orders were several times larger than prior orders and Esprit's ability to produce merchandise was outstripped by its ability to supply it, and (2) Burlington's method of merchandising did not comport with the image and conceptual approach desired by Esprit. In support of its contentions, Esprit notes that it has refused to sell to full-price retailers who have failed to sell conceptually and that it continues to sell to off-price retailers who do sell conceptually.

Federated seeks summary judgment for the same reasons as are asserted by Esprit. Federated denies that any communication, threats or complaints were conveyed to Esprit. Burlington opposes defendants' motions for summary judgment principally on the ground that they are premature. Plaintiff seeks the denial of the summary judgment motions or, alternatively a continuance pursuant to Fed.R.Civ.P. 56(f) so that discovery may proceed.

DISCUSSION

I.

Plaintiff does not state in its papers that a continuance is being sought under Fed.R. Civ.P. 56(f). Instead, Burlington asserts the need for additional discovery as a basis for denying defendants' summary judgment. Nonetheless, I will treat plaintiff's opposition as a motion under Fed.R.Civ.P. 56(f) for a continuance.

Fed.R.Civ.P. 56(f) provides:

Should it appear from the affidavits of a party opposing the motion that he cannot for reasons stated present by affidavit facts essential to justify his opposition, the court may refuse the application for judgment or may order a continuance to permit affidavits to be obtained or depositions to be taken or discovery to be had or may make such other order as is just.

In the context of antitrust litigation, in determining whether a Rule 56(f) motion should be granted, the factors that have been cited as relevant include (1) "the degree of specificity already offered by the charging party that a conspiracy existed," and (2) the "peripheral or focused nature" of discovery requests. See Paul Kadair, Inc. v. Sony Corporation, 694 F.2d 1017, 1030 (5th Cir.1983).

Burlington asserts that there are two depositions of Esprit to be taken; plaintiff seeks to depose Carol Wicks, Secretary-Treasurer of Esprit, and Corrado Federico, President of Esprit's Sports division. Furthermore, Burlington states that discovery with respect to Federated has just commenced. Plaintiff notes that in response to its interrogatories, Federated identified approximately 161 individuals who are employees of either Federated or Esprit but who have had contacts with the other company. Thus, plaintiff wishes to "expeditiously notice the depositions of selected officers and employees of Federated ... and attempt to test the bona fides of defendants' assertions of unilateral conduct." Burlington's Memorandum at 15. Basically, plaintiff wants to embark on a fishing expedition because the discovery has not thus far resulted in any circumstantial or direct evidence of an illegal agreement or conspiracy.

Furthermore, a dilatory plaintiff cannot rely on Rule 56(f). See Paul Kadair, Inc. v. Sony Corporation, 694 F.2d at 1031. In First National Bank of Arizona v. Cities Service Co., the Supreme Court stated:

We do not doubt that, had petitioner introduced some significant evidence that Cities had become a member of the conspiracy ..., more extended discovery under Rule 56(f) of Cities' activities subsequent to its refusal to deal with him would have been proper .... But in this case petitioner was attempting, in effect, to obtain discovery of peripheral aspects of Cities' alleged participation in the conspiracy, after having failed, despite already substantial discovery, to obtain any significant evidence of conspiracy .... It is precisely because the discovery obtainable under Rule 56(f) to oppose a motion for summary judgment would normally be less extensive in scope than the general discovery obtainable under Rule 26, that such a manner of proceeding was properly refused here. 391 U.S. 253, 298, 88 S.Ct. 1575, 1597, 20 L.Ed.2d 569 (1968); see also Contemporary Mission, Inc. v. United States Postal Service, 648 F.2d 97, 107 (2d Cir.1981) ("Something more than a fanciful allegation is required to justify denying a motion for summary judgment when the moving party has met

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