Dart Industries, Inc. v. Plunkett Co. of Oklahoma, Inc.

• Decision Date: 08 April 1983
• Docket Number: Nos. 81-1404,81-1454,s. 81-1404
• Citation: 704 F.2d 496
• Parties: 1983-1 Trade Cases 65,314 DART INDUSTRIES, INC., Ralph Wilson Plastics Division, Plaintiff-Appellee and Cross-Appellant, v. The PLUNKETT COMPANY OF OKLAHOMA, INC., an Oklahoma Corporation, Defendant-Appellant and Cross-Appellee.
• Court: U.S. Court of Appeals — Tenth Circuit

Page 496

704 F.2d 496

1983-1 Trade Cases 65,314

DART INDUSTRIES, INC., Ralph Wilson Plastics Division, Plaintiff-Appellee and Cross-Appellant, v. The PLUNKETT COMPANY OF OKLAHOMA, INC., an Oklahoma

Corporation, Defendant-Appellant and Cross-Appellee.

Nos. 81-1404, 81-1454.

United States Court of Appeals, Tenth Circuit.

April 8, 1983.

Philip R. Russ, Amarillo, Tex. (Douglas L. Boyd, Tulsa, Okl. with him on the brief), for The Plunkett Company of Oklahoma, Inc.

James H. Bellingham of McClelland, Collins, Bailey, Bailey & Manchester, Oklahoma City, Okl., for Dart Industries, Inc., Ralph Wilson Plastics Div.

Before McWILLIAMS, DOYLE and LOGAN, Circuit Judges.

LOGAN, Circuit Judge.

These appeals arise out of Dart Industries, Inc.'s termination of The Plunkett Company of Oklahoma, Inc. as its Tulsa area distributor of the laminates and adhesives it manufactures. Dart sued Plunkett for monies owed on Plunkett's purchases, after having given credit for returned inventory. Plunkett counterclaimed, alleging antitrust violations.

At trial, the only item in dispute on the accounting issue was the amount of credit to be given for cut sheets of plastic Dart repossessed with the other inventory. Dart gave no credit for these materials. The jury award gave Plunkett credit at the same value per square foot as that given for uncut sheets. Dart appeals this determination. The only question is whether the record contains sufficient evidence to support the verdict. We find there is substantial evidence to support the verdict and therefore affirm the judgment entered on the jury verdict on that accounting.

Plunkett's counterclaim alleged Sherman Act Sec. 1, Clayton Act, and Robinson-Patman Act violations. In the alternative, Plunkett sought damages for breach of contract. A month before trial Plunkett sought to amend its pleadings and add a Sherman Act Sec. 2 claim. This motion was denied. Upon cross motions for summary judgment the court granted summary judgment in favor of Dart and dismissed Plunkett's antitrust claims. Plunkett appeals, asserting that summary judgment was improper in this case because there exist genuine issues as to material facts. We have examined Plunkett's contentions and affirm the trial court's judgment. The situation here involves no more than a manufacturer terminating a distributor with whom it is unhappy and substituting another distributor in its place, sanctioned by United States v. Colgate & Co., 250 U.S. 300, 39 S.Ct. 465, 63 L.Ed. 992 (1919). See also Joseph E. Seagram & Sons, Inc. v. Hawaiian Oke & Liquors, Ltd., 416 F.2d 71, 78 (9th Cir.1969), cert. denied, 396 U.S. 1062, 90 S.Ct. 752, 24 L.Ed.2d 755 (1970).

Plunkett alleged that the termination was unlawful because it was motivated by anticompetitive purpose or accompanied by anticompetitive effect. Specifically, Plunkett alleged that the termination implicates (1) price fixing, (2) vertical and horizontal territorial allocations, (3) concerted refusals to deal, (4) Robinson-Patman Act violations, and (5) tying arrangements. A party resisting a motion for summary judgment must do more than make conclusory allegations, it "must set forth specific facts showing that there is a genuine issue for trial." Fed.R.Civ.P. 56(e); First National Bank of Arizona v. Cities Service Co., 391 U.S. 253, 288-90, 88 S.Ct. 1575, 1592-93, 20 L.Ed.2d 569 (1968). This Plunkett did not do. In support of its contention that Dart engaged in price fixing, Plunkett cites three facts: (1) Dart constantly urged Plunkett to lower its prices; (2) on one occasion Dart pressured Plunkett to reduce its prices to a customer; and (3) Dart published a rebate list establishing the amount of rebate Dart would give at particular prices. Neither these facts nor any inferences to be drawn therefrom support the allegation of price fixing. Plunkett retained complete discretion over its pricing policies.

Plunkett also argues that Dart's practices of selling directly to large accounts in Plunkett's area or of "taking over" the accounts when the market price drops below that shown on the rebate list constitutes a horizontal customer allocation. This argument is without merit. There is no evidence of a horizontal agreement to allocate customers. Dart's selling directly to certain large accounts reflects a dual distribution system that standing alone, is perfectly lawful; Dart is simply ensuring a continued presence in the market. Dart's taking over particular accounts from its distributor reflects that there is a certain price level below which Dart will not automatically subsidize a distributor's operation, but rather will determine directly, on a case by case basis, whether to lower its price to meet competition. Plunkett asserts that Dart's refusal to "drop-ship" on behalf of Plunkett into areas serviced by other distributors constitutes an illegal vertical territorial arrangement. This too is without merit. Even rigid vertical territorial divisions are not per se illegal, Continental T.V., Inc. v. GTE Sylvania, Inc., 433 U.S. 36, 97 S.Ct. 2549, 53 L.Ed.2d 568 (1977), and the record reflects no injury to competition that is a predicate to illegality under the rule of reason. Furthermore, the Dart policy is not a rigid territorial division; rather, it resembles an "area of primary responsibility" scheme, which is generally lawful. White Motor Co. v. United States, 372 U.S. 253, 270-72 & n. 12, 83 S.Ct. 696, 705-07 & n. 12, 9 L.Ed.2d 738 (1963) (Brennan, J., concurring); Colorado Pump & Supply Co. v. Febco, Inc., 472 F.2d 637, 639-40 (10th Cir.), cert. denied, 411 U.S. 987, 93 S.Ct. 2274, 36 L.Ed.2d 965 (1973); ABA Section of Antitrust Law, Vertical Restrictions Limiting Intrabrand Competition 20-25 & n. 62 (ABA Monograph No. 2, 1977). In the instant case Dart allows distributors to sell outside their territories; Dart merely refuses to facilitate such sales by direct shipment from the factory. This refusal does not constitute an antitrust violation.

In its counterclaim Plunkett alleged that Dart "contacted numerous accounts of Plunkett and its suppliers, directly or indirectly, in an attempt to cause others to refuse to deal and/or boycott Plunkett." However, in its answers to interrogatories and in its deposition testimony Plunkett admitted that the only fact on which it based this allegation was Plunkett's termination as Dart's distributor. The termination alone does not raise an issue as to any material fact relating to a concerted refusal to deal. Neither can the fact that Central Floor Distributors, Inc. and Dart agreed prior to Plunkett's termination that Central Floor would supplant Plunkett support a boycott allegation.

"Lest any other former distributors succumb to the temptation of treble damages, we reiterate 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 of the new contract is to seriously damage the former distributor's business."

Burdett Sound, Inc. v. Altec Corp., 515 F.2d 1245, 1249 (5th Cir.1975). To hold otherwise would require a manufacturer to permit a gap in its product distribution system and would not serve the procompetitive aims of the antitrust laws. Replacing one exclusive distributor with...