Costen v. Pauline's Sportswear, Inc., No. 21387.

CourtUnited States Courts of Appeals. United States Court of Appeals (9th Circuit)
Writing for the CourtHAMLEY, JERTBERG, and ELY, Circuit
Citation391 F.2d 81
Docket NumberNo. 21387.
Decision Date21 February 1968
PartiesAleta G. COSTEN, Dyal E. Stone, Marie B. Stone, Patricia Ann Hobbs, Nick C. Howat and Margaret A. Howat, Appellants, v. PAULINE'S SPORTSWEAR, INC., Regal Accessories of New York, Robert C. Abild and Desda S. Abild, Appellees.

391 F.2d 81 (1968)

Aleta G. COSTEN, Dyal E. Stone, Marie B. Stone, Patricia Ann Hobbs, Nick C. Howat and Margaret A. Howat, Appellants,
v.
PAULINE'S SPORTSWEAR, INC., Regal Accessories of New York, Robert C. Abild and Desda S. Abild, Appellees.

No. 21387.

United States Court of Appeals Ninth Circuit.

February 21, 1968.


391 F.2d 82

William T. Richert, Fresno, Cal. (argued) of Fullerton, Lang & Richert, Fresno, Cal., for appellant.

Thomas H. Greenwald, Beverly Hills, Cal. (argued), for appellee.

Before HAMLEY, JERTBERG, and ELY, Circuit Judges.

ELY, Circuit Judge.

Appellants, plaintiffs below, challenge the District Court's dismissal of their original complaint and of their amended complaint. The original complaint consists of twelve counts, each appellant1 being covered by three counts. The amended complaint consists of eight counts, in groups of two counts for each appellant. In both complaints there is no substantial difference in the allegations relating to each appellant. Thus, for convenience, the following discussion of the factual situation as alleged in the complaints will be confined to the first group of counts in each complaint, those relating to appellant Aleta G. Costen.

The appellees are a corporation, Pauline's Sportswear, and two of its principal officers. On June 20, 1964, Costen entered into an agreement with the corporation for the franchise rights to a "Pauline's Sportswear" retail clothing shop. Simultaneously, Costen made a sublease agreement with the corporation for the use of certain premises in a shopping center in San Leandro, California. According to the allegations of the complaints, the appellees have entered into approximately seventy-five similar franchise and sublease arrangements in the State of California.

The franchise agreement required that Costen purchase all required merchandise for her retail shop from the appellee corporation and that she sell this merchandise at retail prices established in the agreement, unless the corporation should grant written consent to the charging of different prices. The agreement expressly prohibited Costen from dealing in merchandise manufactured or sold by anyone other than the appellee corporation. Furthermore, both the franchise and the sublease were subject to termination by the corporation if Costen should violate any of the specified restrictions.

Following the execution of this agreement, Costen commenced to operate her shop at the premises covered by the lease. During the period between June 20, 1964, and April 30, 1965, the corporation sold ladies' sportswear to Costen pursuant to the franchise agreement and orders placed by Costen. Throughout the period in which Costen maintained the retail shop, she complied with the terms of the franchise agreement. She was, however, unable to operate the shop at a profit. The complaints allege that she suffered the loss of $5,500, the purchase price of the franchise, plus a net loss from operations in the sum of $1,658.18. Additionally, it is alleged that she suffered a loss of the value of her time and effort for

391 F.2d 83
twenty-nine weeks in the amount of $100.00 per week

Appellants' attorney very forthrightly represented during oral argument that the suit is based solely upon the existence of the franchise and lease arrangement and upon the appellees' pursuit of the arrangement in the ordinary course of business. We are not confronted with allegations of any affirmative action on the part of the appellees to terminate the appellants' business operations or to force appellants to suffer losses. Additionally, the complaints make no allegations concerning any request made by appellants to appellees to allow any particular appellant to depart from any or all of the conditions stated in the franchise agreement. Appellants have alleged, however, that they conformed their actions to the terms of the agreement because they "feared" that appellees would terminate the franchise and evict them from their premises if they did not follow the agreement that each had made with appellees.

On the basis of these allegations, the original complaint charged that appellees had violated section one of the Sherman Act, 15 U.S.C. § 1, by way of resale price maintenance. Secondly, appellants charged that appellees monopolized, or attempted to monopolize, "trade or commerce among the several States having to do with the sale and distribution of manufactured ladies' sportswear," in violation of section two of the Sherman Act, 15 U.S.C. § 2. Thirdly, the complaint charged a violation of section one of the Sherman Act and section three of the Clayton Act, 15 U.S.C. § 14, through exclusive dealing and illegal tie-ins.

Following the filing of the original complaint, appellees filed a "NOTICE OF MOTIONS AND MOTION TO DISMISS." Accompanying this notice was an affidavit of one of the appellees entitled "AFFIDAVIT IN SUPPORT OF MOTIONS TO DISMISS." Attached to this affidavit were two exhibits consisting of copies of the franchise and lease agreements which were "in substance" those signed by the appellants. Among other things, the affiant stated that the appellants had "freely and voluntarily" entered into the franchise arrangements with the appellees, that the appellees were not engaged in interstate commerce, and that the gross annual sales of the appellee corporation were less than one million dollars, out of total annual sales in the women's sportswear industry in excess of one hundred million dollars.

The District Court's hearing on the appellees' motion resulted in an "ORDER GRANTING DEFENDANTS' MOTION TO DISMISS." The order reads, in part, as follows:

"IT IS ORDERED that defendants\' motion to dismiss is hereby granted.
"Contracts prescribing minimum resale prices of a commodity are not illegal when sanctioned by State law. 15 U.S.C.A. § 1.
"The California Business and Professions Code § 16902(a), which is part of the Fair Trade Act, makes legal contracts fixing the resale prices of trademarked commodities which are in fair and open competition with other commodities of the same general class and bear the trademark, brand or name of the producer. Thus assuming all of plaintiffs\' allegations in the complaint to be true, it does not state a claim upon which relief can be granted.
"Counsel for defendants is directed to prepare and lodge findings of fact, conclusions of law and form of judgment in accordance with Local Rule 7."

Subsequently, following the district judge's agreement with appellants' objection...

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26 practice notes
  • Dale v. Hahn, No. 169
    • United States
    • United States Courts of Appeals. United States Court of Appeals (2nd Circuit)
    • 19 Febrero 1971
    ..."all parties" that it is treating the 12(b) (6) motion as a motion for summary judgment. Costen v. Pauline's Sportswear, Inc., 391 F.2d 81, 85 & n. 5 (9 Cir. 1968); 2A Moore, Federal Practice, ¶ 12.09, 2300-02 & nn. 23 & 25. Here, the district judge gave no indication ......
  • Shehadeh v. Chesapeake and Potomac Telephone Co. of Maryland, No. 76-1790
    • United States
    • United States Courts of Appeals. United States Court of Appeals (District of Columbia)
    • 8 Noviembre 1978
    ...373 F.2d 493, 496-498 (5th Cir.), Cert. denied, 389 U.S. 851, 88 S.Ct. 69, 19 L.Ed.2d 839 (1967); Costen v. Pauline's Sportswear, Inc., 391 F.2d 81, 84-85 (9th Cir. 1968); Fed.R.Civ.P. 12(b)(6) ("(i)f . . . matters outside the pleading are presented to and not excluded by the court, th......
  • Stein v. United Artists Corp., No. 80-5337
    • United States
    • United States Courts of Appeals. United States Court of Appeals (9th Circuit)
    • 3 Noviembre 1982
    ...AMFAC Mortgage Corp. v. Arizona Mall of Tempe, Inc., 583 F.2d 426, 430 & n.3 (9th Cir. 1978); Costen v. Pauline's Sportswear, Inc., 391 F.2d 81, 84 & n.2 (9th Cir. I. Century's Unlisted Antitrust Claim Century did not list the antitrust cause of action against appellees in the arran......
  • Cooper v. Bell, No. 78-2265
    • United States
    • United States Courts of Appeals. United States Court of Appeals (9th Circuit)
    • 17 Octubre 1980
    ...the requisite notice and opportunity to submit all pertinent material required by rule 12(b). See Costen v. Pauline's Sportswear, Inc., 391 F.2d 81, 84-86 (9th Cir. 1968); Chicago-Midwest Meat Ass'n v. City of Evanston, 589 F.2d 278, 282 (7th Cir. 1978), cert. denied, 442 U.S. 946, 99 S.Ct.......
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26 cases
  • Dale v. Hahn, No. 169
    • United States
    • United States Courts of Appeals. United States Court of Appeals (2nd Circuit)
    • 19 Febrero 1971
    ...court to "all parties" that it is treating the 12(b) (6) motion as a motion for summary judgment. Costen v. Pauline's Sportswear, Inc., 391 F.2d 81, 85 & n. 5 (9 Cir. 1968); 2A Moore, Federal Practice, ¶ 12.09, 2300-02 & nn. 23 & 25. Here, the district judge gave no indication that he was g......
  • Shehadeh v. Chesapeake and Potomac Telephone Co. of Maryland, No. 76-1790
    • United States
    • United States Courts of Appeals. United States Court of Appeals (District of Columbia)
    • 8 Noviembre 1978
    ...373 F.2d 493, 496-498 (5th Cir.), Cert. denied, 389 U.S. 851, 88 S.Ct. 69, 19 L.Ed.2d 839 (1967); Costen v. Pauline's Sportswear, Inc., 391 F.2d 81, 84-85 (9th Cir. 1968); Fed.R.Civ.P. 12(b)(6) ("(i)f . . . matters outside the pleading are presented to and not excluded by the court, the mot......
  • Stein v. United Artists Corp., No. 80-5337
    • United States
    • United States Courts of Appeals. United States Court of Appeals (9th Circuit)
    • 3 Noviembre 1982
    ...See AMFAC Mortgage Corp. v. Arizona Mall of Tempe, Inc., 583 F.2d 426, 430 & n.3 (9th Cir. 1978); Costen v. Pauline's Sportswear, Inc., 391 F.2d 81, 84 & n.2 (9th Cir. I. Century's Unlisted Antitrust Claim Century did not list the antitrust cause of action against appellees in the arrangeme......
  • Cooper v. Bell, No. 78-2265
    • United States
    • United States Courts of Appeals. United States Court of Appeals (9th Circuit)
    • 17 Octubre 1980
    ...the requisite notice and opportunity to submit all pertinent material required by rule 12(b). See Costen v. Pauline's Sportswear, Inc., 391 F.2d 81, 84-86 (9th Cir. 1968); Chicago-Midwest Meat Ass'n v. City of Evanston, 589 F.2d 278, 282 (7th Cir. 1978), cert. denied, 442 U.S. 946, 99 S.Ct.......
  • Request a trial to view additional results

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