Capital Temporaries, Inc. of Hartford v. Olsten Corp., 68

• Citation: 506 F.2d 658
• Decision Date: 17 October 1974
• Docket Number: No. 68,D,68
• Parties: 1974-2 Trade Cases 75,303 CAPITAL TEMPORARIES, INC. OF HARTFORD, et al., Plaintiffs and Appellants, v. The OLSTEN CORPORATION, Defendant and Appellee. ocket 74-1077.
• Court: United States Courts of Appeals. United States Court of Appeals (2nd Circuit)

Page 658

506 F.2d 658

1974-2 Trade Cases 75,303

CAPITAL TEMPORARIES, INC. OF HARTFORD, et al., Plaintiffs and Appellants, v. The OLSTEN CORPORATION, Defendant and Appellee.

No. 68, Docket 74-1077.

United States Court of Appeals, Second Circuit.

Argued Sept. 19, 1974.

Decided Oct. 17, 1974.

Ralph C. Dixon, Hartford, Conn. (Day, Berry & Howard, Philip S. Walker, Augustus R. Southworth III, Hartford, Conn., on the brief), for plaintiffs-appellants.

Irving S. Ribicoff, Hartford, Conn. (Ribicoff & Kotkin, Richard W. Tomc, Hartford, Conn.; Fain & Konover, Matthew J. Forstadt, Stamford, Conn., on the brief), for defendant-appellee.

Before MOORE, MULLIGAN and ADAMS, ¹ Circuit Judges.

MULLIGAN, Circuit Judge:

This is an appeal from a partial summary judgment entered by the District Court for the District of Connecticut, Hon. M. Joseph Blumenfeld, on October 15, 1973, dismissing the fifth count of the plaintiff's amended complaint. 365 F.Supp. 888 (D.Conn.1973). The ruling of the district court also denied the plaintiff's cross-motion for summary judgment on the same count, rejecting plaintiff's contention that there was no genuine issue as to any material fact and that the defendant, as a matter of law, had imposed a tie-in, illegal per se under section 1 of the Sherman Act. Thereafter, on October 25, 1973, plaintiff moved to amend the judgment, pursuant to 28 U.S.C. 1292(b), to include a statement that it involved a controlling question of law as to which there was a substantial ground for difference of opinion and that an immediate appeal from the order might materially advance the ultimate termination of the litigation. By order dated December 4, the District Court amended the judgment to include the necessary statement but did not state what the controlling question of law was.

On December 21st, the plaintiff filed a petition for leave to appeal, setting forth the controlling question of law in these terms:

The question involved in this appeal is whether the plaintiff must establish actual coercion, outside of the agreement, to operate the tied business, in order to maintain its antitrust action or is it sufficient to show that the plaintiffs were restricted by the contract imposed by the defendant in operating any blue collar business other than under the HANDY ANDY mark with the payment of franchise fees to the defendant.

On January 9th, 1974, this court granted leave to appeal pursuant to 1292(b) and rule 5, Fed.R.App.P. On March 22, the plaintiff, in designating the part of the record to be included in the appendix, stated that the question on appeal was whether the district court erred in granting the defendant's motion for summary judgment. Defendant then moved for an order to limit the statement of issues to the controlling question of law presented in plaintiff's petition for leave to appeal; on April 18th, this court granted that motion. On this appeal the plaintiff-appellant's brief raises not only the controlling question of law, but also the propriety of the granting of summary judgment dismissing the fifth count. The defendant has moved to dismiss the appeal on the ground that the issues raised are broader than the question which was specified by the order of this court.

I THE MOTION TO DISMISS

Before discussing the merits of this appeal, we face the question as to whether or not this court can appropriately consider the argument, now made by plaintiff, that in addition to the question posed as the controlling issue of law, the court below committed error by the granting of summary judgment. Section 1292(b) permits an appeal from an interlocutory order where the order involves 'a controlling question of law as to which there is substantial ground for difference of opinion and (where) an immediate mediate appeal from the order may materially advance the ultimate termination of the litigation. . . . The Court of Appeals may, . . . in its from such order. . . .' Once such leave to appeal is Once such leave to appeal is granted, the court of appeals 'is not restricted to a decision of the question of law which in the district judge's view was controlling.' Katz v. Carte Blanche Corp., 496 F.2d 747, 754 (3d Cir. 1974) (en banc). Accord, Johnson v. Alldredge, 488 F.2d 820, 822-823 (3d Cir. 1973).

Since the appeal therefore places before us the order granting partial summary judgment dismissing the fifth count of the complaint, we believe that judicial economy requires that we address ourselves not only to the question but also to the propriety of the issuance of the summary judgment. 9 J. Moore, Federal Practice P110.25(1) at 273 (2d ed. 1973). See also Hurwitz v. Directors Guild of America, Inc., 364 F.2d 67, 70 (2d Cir.), cert. denied,385 U.S. 971, 87 S.Ct. 508, 17 L.Ed.2d 435 (1966). The motion to dismiss the appeal is therefore denied.

II THE FACTS

Defendant, The Olsten Corporation (Olsten), a Delaware corporation with its principal place of business in New York, is engaged in the business of supplying temporary personnel to customers. It supplies both 'white collar' or office personnel under the name and registered trademark of 'Olsten,' and 'blue collar' or non-office workers under the name and registered tradmark of 'Handy Andy Labor'. These services are supplied in many cities throughout the United States and Canada either through Olsten branch offices or through franchises listed by Olsten. In 1965, Constantine T. Zessos, a salesman with no previous personnel-business experience, which culminated in a franchise which culminated in a franchise agreement executed on September 17, 1965. This agreement provided Zessos the exclusive license to use both of defendant's trademarks and names, plus various techniques and systems, in Hartford and Middlesex counties in the State of Connecticut. A rider executed by the parties on the same date also conferred upon Zessos the right to operate a white collar franchise in the County of New Haven provided it was opened within 18 months after the first billing rendered by the Olsten's Hartford office.

Zessos attended a course provided by Olsten and also received various supplies and forms necessary for the business. Pursuant to the license agreement, Zessos started his white collar operation in Hartford in January, 1966, and a similar operation in New Haven some time thereafter. These were incorporated as Olsten's of Hartford County, Inc. and Olsten's of New Haven County, Inc.; the names were later changed in November, 1971 to Capital Temporaries, Inc. of Hartford and Capital Temporaries, Inc. of New Haven. These latter corporations are presently plaintiffs in this action together with Zessos.

No blue collar operation was commenced by Zessos in Hartford, but in 1968 and 1969 he negotiated an amendment to the initial agreement. The amendment, executed on August 23, 1969, extended Zessos's time to open a Handy Andy office in Hartford and New Haven to December 31, 1969. In September, 1969, he did open a Handy Andy office in New Haven, which remained in operation until June, 1971.

On November 1, 1971, Zessos repudiated the franchise agreement and acrimonious litigation ensued. Olsten sued Zessos in the Connecticut Superior Court to enforce the agreement and to recover franchise fees alleged to be due and owing under the agreement. Zessos then commenced this action in the District Court of Connecticut, alleging, inter alia, breach of contract, material misrepresentation, unfair competition, abuse of attachment process, and conspiracy to fix prices. Count five, the sole matter before this court, in essence urges that, in order to obtain an exclusive license to use the Olsten trade name and mark to operate a white collar franchise, Zessos was required to establish and operate a blue collar operation under the 'Handy Andy Labor' trademark. According to the complaint, this constituted an illegal tie-in arrangement which is a per se violation of section 1 of the Sherman Act (15 U.S.C. 1), as well as a violation of section 3 of the Clayton Act (15 U.S.C. 14). The plaintiff's cross-motion for summary judgment, however, is limited to the claim of a tie in violation of Sherman 1. ¹ The typing product is alleged to be Olsten and the tied product, Handy Andy Labor.

III THE QUESTION POSED

A. The Necessity of Coercion

The first segment of the question posed as controlling is whether the plaintiff, in order to establish unlawful tying, must show actual coercion, outside of the agreement, to operate the tied business. The court below found that the record was 'utterly devoid of evidence that Zessos was in any way coerced or compelled to open a Handy Andy office,' or 'that Zessos attempted to free himself from the supposed burden of having to open a Handy Andy office, or that he bargained with Olsten for a white-collar franchise alone.' 365 F.Supp. at 894.

We do not think that there can be any question that no tying arrangement can possibly exist unless the person aggrieved can establish that he has been required to purchase something which he does not want to take. Unlike other exclusive-dealing arrangements, which Mr. Justice Frankfurter took pains to distinguish in Standard Oil Co. v. United States, 337 U.S. 293, 300-306, 69 S.Ct. 1051, 93 L.Ed. 1371 (1949), 'tying agreements serve hardly any purpose beyond the suppression of competition,' id. at 305-306, 69 S.Ct. at 1058. Where a not insubstantial amount of commerce is involved, a tying arrangement constitutes a per se violation of section 1 of the Sherman Act. Northern Pacific Ry. v. United States, 356 U.S. 1, 6, 78 S.Ct. 514, 2 L.Ed.2d 545 (1958). However, before the plaintiff can become entitled to the benefit of the per se doctrine, and thereby escape the proof otherwise required to establish an undue or unreasonable restraint under the rule of reason approach, it is basic that he first establish that he is the unwilling purchaser of an unwanted product. To that extent there must be a showing of...