Daniels v. All Steel Equipment, Inc., 77-2132
| Citation | 590 F.2d 111 |
| Decision Date | 21 February 1979 |
| Docket Number | No. 77-2132,77-2132 |
| Parties | 1979-1 Trade Cases 62,476 Thomas H. DANIELS, Plaintiff-Appellant, v. ALL STEEL EQUIPMENT, INC., Stationers, Inc., J. H. Hartman, R. W. Sprott, Speedy Moore, and Harry Licata, Defendants-Appellees. |
| Court | United States Courts of Appeals. United States Court of Appeals (5th Circuit) |
Lionel M. Schooler, Houston, Tex., for plaintiff-appellant.
Lee N. Abrams, Alan N. Salpeter, Chicago, Ill., Robert H. Singleton, Houston, Tex., for All Steel Equipment, Inc.
Lewis F. Pennock, Houston, Tex., for Speedy Moore.
William L. Bowers, Jr., Houston, Tex., for W. C. Moore.
B. J. Bradshaw, Richard N. Carrell, Houston, Tex., for Stationers, Inc. and Harry Licata.
Appeal from the United States District Court for the Southern District of Texas.
Before INGRAHAM, GEE and FAY, Circuit Judges.
The appellant, Thomas Daniels, is suing All Steel Equipment, Inc. ("All Steel") and Stationers, Inc. ("Stationers") and their officers and principals for violations of the Sherman and Clayton Acts. He also presents several pendent state law claims. The trial court granted summary judgment in favor of all defendants with respect to the federal antitrust claims and dismissed with prejudice the remaining claims.
Appellee All Steel is a manufacturer of steel office furniture. All Steel markets its products through independent sales representatives who service customers and promote sales through full-line dealers and other distributors. A full-line dealer is a distributor authorized by All Steel to offer for sale all of All Steel's office furniture. Other distributors may sell only selected items from the All Steel product line. A sales representative derives his income from commissions paid to him by All Steel on sales by dealers and distributors within his territory. Sales representatives engage in no direct selling.
Appellant Thomas Daniels was an All Steel sales representative. His sales territory comprised roughly the geographical lower one-half of Texas, including Houston. Prior to 1974, appellee Stationers was the sole full-line All Steel dealer in Houston. In 1974 Daniels helped to establish Josco, Inc. ("Josco") as the second such dealer in the Houston area. Daniels complains that Stationers influenced All Steel to terminate his contract in retaliation for his introduction of competition (Josco) into the Houston market for All Steel products. 1 Josco is not a party to this suit. Josco continues to compete with Stationers as a full-line dealer in All Steel products.
After analyzing both the questions of the proper antitrust standard and whether or not summary judgment was appropriate, we affirm.
Appellant Daniels' ship struck the shoals when the trial judge analogized his case to the dealer termination cases. In an effort to complete the voyage, Daniels has launched his lifeboat. This, however, does not weaken the shore's grip on Daniels' dauntless dinghy. Daniels' case is not a dealer termination case. See, e. g., H & B Equipment Co., Inc. v. International Harvester Co., 577 F.2d 239 (5th Cir. 1978); Northwest Power Products, Inc. v. Omark Industries, Inc., 576 F.2d 83 (5th Cir. 1978); Kestenbaum v. Falstaff Brewing Corp., 575 F.2d 564 (5th Cir. 1978); Burdett Sound, Inc. v. Altec Corp., 515 F.2d 1245 (5th Cir. 1975). However, we view this case as weaker than, although analogous to, the dealer termination cases. We therefore look to those cases for the standard against which to test the propriety of summary judgment.
In Burdett, a pre-Continental T.V. 2 case, we held "that it is simply not an antitrust violation for a manufacturer to contract with a new distributor, and as a consequence, to terminate his relationship with a former distributor, even if the effect is to seriously damage the former distributor's business." 515 F.2d at 1249. An antitrust violation only occurs if the termination produces an "unreasonable restraint of trade." Id. at 1248. Continental T.V. teaches that market considerations provide the "objective benchmarks" for distinguishing antitrust violations. 433 U.S. at 53 n.21, 97 S.Ct. 2549. Accordingly, we held in H & B Equipment that the mere intent to eliminate a distributor does not establish a cause of action for violation of the antitrust laws. Likewise, we held in Northwest Power Products that the use of otherwise unfair competition in the elimination and replacement of a distributor does not, in itself, violate the rule of reason.
"The first step in establishing an unreasonable restraint of trade is to show anticompetitive effect, either in the intrabrand or interbrand markets." 577 F.2d at 246. The Supreme Court in Continental T.V. recognized that a reduction in intrabrand competition is not pernicious as long as there exists interbrand competition, which acts as a "significant check on the exploitation of intrabrand market power because of the ability of consumers to substitute a different brand of the same product." 433 U.S. at 53 n.19, 97 S.Ct. at 2559. Applying this reasoning in H & B Equipment, Northwest Power Products, and Kestenbaum, we required a showing of adverse market impact even though the defendants may have engaged in questionable business practices and a competitor was eliminated. We could hardly require more where, as here, the alleged misdeeds were less culpable and where no competitor was eliminated.
Daniels' only possible claims to adverse market impact are in the area of intrabrand competition. He contends that, although he himself was not a competitor either to All Steel or to Stationers, he should not be punished for trying to enhance All Steel's competitive position by providing competition to Stationers in the sale of All Steel products in Houston. Furthermore, Daniels seems to argue that, if he is eliminated, the intrabrand market loses a font of future competitors. However, these thin reeds of argument were cut by the appellees' motion for summary judgment.
Summary judgment was properly granted in this instance. First, Daniels in his deposition admitted...
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...be dismissed, in light of United Mine Workers v. Gibbs, 383 U.S. 715, 86 S.Ct. 1130, 16 L.Ed.2d 218 (1966), and Daniels v. All Steel Equipment, Inc., 590 F.2d 111 (5th Cir.1979), this Court declines to exercise pendent jurisdiction and therefore dismisses the state claims without prejudice.......
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