Dr. G. H. Tichenor Antiseptic Co. v. Schwegmann Bros. Giant Super Markets

• Decision Date: 07 November 1955
• Docket Number: No. 20590,20590
• Citation: 83 So.2d 502
• Parties: DR. G. H. TICHENOR ANTISEPTIC COMPANY v. SCHWEGMANN BROTHERS GIANT SUPER MARKETS et al.
• Court: Court of Appeal of Louisiana — District of US

Page 502

83 So.2d 502

DR. G. H. TICHENOR ANTISEPTIC COMPANY v. SCHWEGMANN BROTHERS GIANT SUPER MARKETS et al.

No. 20590.

Court of Appeal of Louisiana, Orleans.

Nov. 7, 1955.

Rehearing Denied Dec. 5, 1955.

Second Rehearing Denied Jan. 16, 1956.

Writ of Certiorari Granted Feb. 23, 1956.

Wisdom, Stone, Pigman & Benjamin, John Minor Wisdom and Saul Stone, New Orleans, for defendants-appellants.

Jones, Walker, Waechter, Dreux & Poitevent; A. J. Waechter, Jr., New Orleans, for plaintiff-appellee.

Henican, James & Cleveland, Murray F. Cleveland, New Orleans, for Louisiana State Pharmaceutical Association, amicus curiae.

JANVIER, Judge.

As stated in the reasons for judgment given by the Judge of the Civil District Court for the Parish of Orleans, 'this action is brought by Dr. G. H. Tichenor Antiseptic Company, a Louisiana Corporation with its principal offices in New Orleans, against Schwegmann Brothers Giant Super Markets, a commercial partnership, and the individual partners thereof, asking for an injunction to prohibit the defendants from advertising for sale, offering for sale, and selling a product manufactured by the plaintiff, known as Dr. Tichenor's antiseptic, at prices less than the minimum retail prices set by the plaintiff in the retail fair trade contract which is annexed to the petition, or at prices less than those which may be shown in any future minimum retail price schedule issued by the plaintiff in connection with contracts with other retail dealers, and from making any rebates, refunds, discounts or concessions of any kind or character for the purpose of, or which will result in, decreasing the minimum retail prices.'

The Louisiana Fair Trade Statute which is invoked by plaintiff is LSA-R.S. 51:391 et seq.

There was judgment perpetuating the preliminary writ of injunction against respondents, restraining them from advertising, offering for sale, or selling Dr. Tichenor's antiseptic at prices below the minimum retail prices set by the plaintiff under a certain fair trade contract which had been made with another retailer.

Respondents appealed devolutively to the Supreme Court of Louisiana which, finding that it was without appellate jurisdiction for the reason that the record did not show that there is in dispute a sum in excess of $2,000, and that the matter does not 'fall within any other of the classes of cases of which this court (the Supreme Court) is given appellate jurisdiction * * *,' transferred the matter to this Court.

When the case was argued before us, counsel for appellees directed our attention to many decisions of different courts, including the Supreme Court of Louisiana, the United States Circuit Court of Appeals for the Fifth Circuit, and the Supreme Court of the United States, and they asserted that those decisions, particularly Schwegmann Bros. Giant Super Markets v. Eli Lilly & Co., 1953, 5 Cir., 205 F.2d 788, certiorari denied 346 U.S. 856, 74 S.Ct. 71, 98 L.Ed. 369; Pepsodent Co. v. Krauss Co., 200 La. 959, 9 So.2d 303, and Old Dearborn Distributing Co. v. Seagram Distillers Corp., 299 U.S. 183, 57 S.Ct. 139, 81 L.Ed. 109, are decisive of the issues which are involved here. To those there may now be added Schwegmann Brothers Giant Super Markets v. Hoffmann-LaRoche, Inc., 5 Cir., 221 F.2d 326, in which the Supreme Court of the United States denied writs of certiorari. 76 S.Ct. 77.

Counsel for respondents, nevertheless, maintain that the Supreme Court of the United States, in a late expression on the subject, Schwegmann Bros. Giant Super Markets v. Calvert Distillers Corp., 341 U.S. 384, 71 S.Ct. 745, 95 L.Ed. 1035, evidenced a change in its views concerning the constitutionality vel non of such fair trade legislation as is involved here, and indicated that such legislation contravenes certain provisions of the Federal Constitution and of the Constitution of Louisiana.

We see no reason to postpone until the end of our discussion an announcement of our conclusion on the subject, and therefore state now that we cannot agree with counsel for respondents and that we think that the Calvert case, supra, may be distinguished and that consequently, as a result of the decisions in the Pepsodent case, in the Old Dearborn case, in the Eli Lilly case, and in the Hoffmann-LaRoche case, the judgment of the Civil District Court in this case must be affirmed.

We find ourselves unable to distinguish the facts which appear and the law which was found to be applicable in the Eli Lilly case and in the Pepsodent case from the facts which are found here and the law which we think is applicable to those facts.

As we read Pepsodent, it, in unmistakable language, holds that the Louisiana Fair Trade Statute violates no provisions of the Constitution of Louisiana, and we think that the Eli Lilly decision clearly holds that, where such a statute does not contravene the provisions of the Constitution of the state of its enactment, such statute, as a result of the effect of the McGuire Act, 66 Stat. 631, 15 U.S.C.A. § 45 and note, Act of July 14, 1952, may be invoked to prevent the sale at retail of any fair traded article or product below the minimum price established in any contract, even though the retailer sought to be enjoined may not have been a party to the contract.

So striking is the similarity of the Eli Lilly case and of the Pepsodent case to this case that we shall quote liberally from those decisions since we are not so vain as to believe that we are capable of presenting clearer statements and discussion of the issues than is found in these decisions.

In the Eli Lilly case the issue was stated as follows : 'The essential facts are not in dispute. The appellants concede that the appellee's fair trade prices had been established by contracts entered into in accordance with the Louisiana Fair Trade Law; that appellee's products were in fair and open competition with commodities of the same general class produced by others; and that the appellants, themselves not signers of such a contract, willfully and knowingly disregarded the minimum prices established under contracts between the appellee and other Louisiana retailers. It was established also that the appellants had a uniform mark-up, employed no loss leaders, and indulged in no otherwise predatory practices. The appellants planted their defense squarely upon a challenge to the constitutionality of the Louisiana Fair Trade Law and a further challenge to the constitutionality of the McGuire Act.'

The Court of Appeals then said:

'The Louisiana Supreme Court has sustained the validity of the Louisiana Fair Trade Law, and its decision is conclusive, insofar as the State constitution is concerned. Pepsodent Co. v. Krauss Co., 200 La. 959, 9 So.2d 303.'

The contentions of the respondents there were stated by the Court as follows:

'The appellants contend that the State or Federal act or both together amount to an unconstitutional delegation of a legislative function, violate the due process clause, offend the commerce clause, and stem from self-defeating statutory provisions.

'As to the Louisiana Fair Trade Law, the appellants say that it violates the due process clause of the Fourteenth Amendment to the United States Constitution, because it bears no substantial relation to the public welfare, and because it delegates legislative power to private individuals.'

What is meant by the contention that the Louisiana Statute, together with the McGuire Act, unconstitutionally delegates a legislative function and that there is a violation of the Due Process Clause and the Commerce Clause is easily understood.

The contention that there are self-defeating statutory provisions in the Sherman Act as it is now amended by the Miller-Tydings Act, 15 U.S.C.A. § 1, and by the McGuire Act is this: Counsel say that the sole purpose of the Sherman Act was and is to prevent a group of manufacturers or wholesalers, or retailers who are on a horizontal level, from agreeing upon a price, and that if the McGuire amendment permits a manufacturer, by making a contract with one retailer providing that the produce will not be sold at a price below the minimum fixed in the contract to bind all other retailers, even those who are not parties to the contract, then the effect is to permit the manufacturer, by making a contract with one retailer, to effectually bring about a horizontal price fixing among all retailers and that this defeats the purpose of the Sherman Act.

We are unable to distinguish those contentions from the contentions presented here. Counsel for respondents, however, maintain that in Schwegmann Bros. v. Calvert Distillers Corp., supra, which is referred to in the Eli Lilly decision as the 'Schwegmann opinion', the Supreme Court of the United States which, in the Old Dearborn case, had clearly rejected those identical contentions, indicated a change of view and that, as a result of that decision, which we shall refer to as the 'Calvert' decision, the conclusion reached in the Old Dearborn case was rendered obsolete. That identical contention was made in the Eli Lilly case and was rejected by the United States Circuit Court of Appeals for the Fifth Circuit and was obviously rejected by the Supreme Court of the United States when it refused a writ of certiorari which was applied for. That that identical contention was made is evidenced by the following quotation from the Eli Lilly case:

'Appellants' grounds for questioning that the Old Dearborn case controls here seem to be an assertion supported by various economic texts that the years of experience in the fair trade acts since Old Dearborn have established that the real purpose of these Acts is not so much to protect the good will of the manufacturer or trade mark owner as it is to protect the retailer from competition with other retailers, and further, that the opinion in the Schwegmann [Calvert] case * * * has rendered Old Dearborn obsolete.'

The Court then explained the...