Energex Lighting v. NORTH AMER. PHILIPS LIGHTING

• Decision Date: 24 May 1991
• Docket Number: No. 83 Civ. 3929 (CBM).,83 Civ. 3929 (CBM).
• Citation: 765 F. Supp. 93
• Parties: ENERGEX LIGHTING INDUSTRIES, INC., Plaintiff, v. NORTH AMERICAN PHILIPS LIGHTING CORPORATION, et al., Defendants.
• Court: U.S. District Court — Southern District of New York

765 F. Supp. 93

ENERGEX LIGHTING INDUSTRIES, INC., Plaintiff, v. NORTH AMERICAN PHILIPS LIGHTING CORPORATION, et al., Defendants.

No. 83 Civ. 3929 (CBM).

United States District Court, S.D. New York.

May 24, 1991.

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Robert F. Wood, Dinkes & Morelli, New York City, for plaintiff.

John Vanderstar, Jeffrey Pash, Covington & Burling, Washington, D.C., Lile H. Deinard, White & Case, New York City, for defendants.

MOTLEY, District Judge.

After plaintiff presented its case to this court, defendant moved for a dismissal of the case under Fed R.Civ.P. 41(b). In ruling on a Rule 41(b) motion, it is the duty of this court to "take an unbiased view of all the evidence, direct and circumstantial, and accord it such weight as the court believes it is entitled to receive." Furth v. Inc. Pub. Co., 823 F.2d 1178, 1179 (7th Cir.1987) (quoting Sanders v. General Services Administration, 707 F.2d 969, 971 (7th Cir.1983)). Fed R.Civ.P. 41(b) directs the court not to make any "inferences in the plaintiff's favor but rather to weigh all the evidence and decide where the preponderance lies." Id. See also Hersch v. United States, 719 F.2d 873, 876 (6th Cir. 1983) (under Rule 41(b), it is the duty of the court to weigh the evidence and no special inferences in favor of plaintiff should be made); Bertolino v. Italian Line, 414 F.Supp. 279, 285 (S.D.N.Y.1976) (same); White v. Jaegerman, 391 F.Supp. 438, 439 (S.D.N.Y.1975) (under 41(b) the "court has power to decide the case on the merits and, unlike a jury case, need not consider plaintiff's evidence in a light most favorable to plaintiff"). Furthermore even if plaintiff had made out a prima facie case which would withstand a motion for a directed verdict, this court may still dismiss the case under Rule 41(b). Huber v. American President Lines, 240 F.2d 778, 779 (2d Cir. 1957).

For the reasons stated below, defendant's motion is granted.

FINDINGS OF FACT AND CONCLUSIONS OF LAW

Pursuant to Fed.R.Civ.P. 52, the court makes the following findings of fact and conclusions of law:

This case involves what plaintiff has called the guaranteed lamp market. This market consists of both fluorescent bulbs and incandescent long life bulbs. (Tr. 922). The incandescent bulbs are long lasting bulbs that burn for a longer period of time than regular incandescent bulbs. Their rated life is a couple of thousand hours. (Tr. 149, 821). These bulbs have a number of unique characteristics such as the construction of their filament and base. (Tr. 148-149, 2225). The fluorescent bulbs sold in this market are exactly the same as any other fluorescent bulb and possess no unique characteristics. (Tr. 151, 822-823, 1114; Stip. 26). They generally have a rated life of approximately 24,000 hours. (Tr. 821).

Both the fluorescent and incandescent bulbs, in the long life market, are sold with a guarantee by the distributor that they will last a specified number of months. (Tr. 84, 151, 922). If they do not last, they are replaced free of charge. (Tr. 148). These guaranteed bulbs sell at a price of four to seven times the price of ordinary bulbs. (Plaintiff's Exh. 115, Tr. 922). Testimony was elicited from Mr. Howell, the president of Energex, which demonstrated that the guarantee on the fluorescent bulbs had little economic value because the rate at which these bulbs burned out, before the guarantee expired, was under ten percent. (Tr. 1351-1352). Thus it is more efficient to purchase fluorescent bulbs without the guarantee. Dr. Levenson, plaintiff's expert witness, believed that the same also held true for incandescent bulbs. (Tr. 2225). Most guaranteed long life bulbs are sold to industrial establishments such as banks, schools, stores, warehouses and manufacturing plants. (Tr. 150, 914).

During the relevant time period of 1978-1980, there were eight companies that manufactured guaranteed long life lamps. These companies were: Duro Test, Philips, Westinghouse, Sylvania, Energex, Marvel, Solar and Penn Illuminating. Of these, only Duro Test, Philips, Westinghouse and Sylvania manufactured their own fluorescent bulbs for the guaranteed long life market. (Plaintiff's Exh. 512.)

Barriers to entry in to the market are moderate. The machinery needed to produce bulbs is quite expensive, but actually obtaining it is not that difficult because used equipment is available in this Country and new equipment is manufactured overseas. (Tr. 144-145, 846-847, 892-893, 1792-1793). In addition to purchasing the machines, skilled workers must be found to maintain the machines. (Tr. 145, 1793). However, there are no special patents involved in manufacturing long life incandescent light bulbs. As already stated, all fluorescent bulbs are the same, so any manufacturer of fluorescent bulbs could enter the guaranteed long life market. (Tr. 2340-2341). In addition, in 1980, two other firms entered the guaranteed lamp market — Action Tungsram and Angelo Brothers. (Plaintiff's Exhibit 77-IX). Another firm, Supreme, also entered the market after the demise of Energex. (Plaintiff's Exh. 513, Tr. 143, 1792). Thus the entry of these firms shows that the market was not saturated and that manufacturing equipment could be obtained.

Defendant Philips Lighting, a Delaware corporation, is a manufacturer of light bulbs and other lighting products, including long life lamps. (Stip. 7, 8). Guaranteed Service Lighting Products (GSLP) was a division of Philips that sold guaranteed long life lamps to distributors. (Stip. 13, 14). Through its various divisions, Philips sells to both distributors and directly to end users. Philips manufactured both fluorescent and incandescent bulbs for the guaranteed long life market. (Plaintiff's Exh. 512).

Plaintiff Energex, a New Jersey Corporation, manufactured long-life incandescent bulbs. (Stip. 4). They, however, purchased all of their fluorescent bulbs from Philips. (Stip. 5). Of the incandescent bulbs Energex sold, it purchased a small amount from Philips. (Tr. 1217, 1218, 1221). In this industry, it is necessary for a manufacturer to be able to sell both incandescent and fluorescent bulbs to distributors; otherwise distributors would go to a manufacturer that could meet all of their lighting needs. (Tr. 1183, 1837, 2183). Mr. Howell testified that Philips was the only manufacturer that would supply Energex with fluorescent bulbs. Other manufacturers refused to sell to Energex because Energex did not possess sufficient purchasing power. (Tr. 1103). In 1978, Energex was the largest customer of Philips-GSLP. (Tr. 855). Thus Energex was a competitor of Philips but at the same time depended upon Philips to supply it with fluorescent bulbs. In the same vein, Philips was a competitor of Energex but Energex was a very large customer of GSLP. (Tr. 632). Due to these circumstances, Philips was in a position in which it could "squeeze" Energex by selling Energex fluorescent bulbs for resale at one price and selling the same product directly to companies that were customers of Energex at the same or lower prices. (Tr. 633).

Energex sold its lamps to distributors who then sold them to industrial end users. (Stip. 4). Energex also sold a large number of long life incandescent bulbs to Torch Lighting which used telephone sales to sell directly to the home consumer. (Tr. 1557).

From approximately 1969 to July 1976, Energex was owned and controlled by Salvatore Caravetta. (Tr. 1675-1678). In July 1976, Caravetta sold Energex to Maintenance Engineering (M.E.), a corporation headquartered in Fargo, North Dakota for approximately $650,000. (Plaintiff's Exh. 437, Tr. 1701). M.E. is a distributor of lighting products, including long life bulbs. (Tr. 915). Part of the purchase price was to be paid over time to Caravetta, who reserved the right to retake control of Energex in the event M.E. failed to make the scheduled payments. (Plaintiff's Exh. 437, Tr. 1713-1714).

John Howell served as President of Energex from July 1976 until the business ceased operation in 1980. (Stip. 24). Prior to joining Energex, Howell had been the General Manager of GSLP. (Tr. 77).

Numerous invoices (Plaintiff's Exh. 231, 232, 213, 222, 236, 237, et al.) show that, in 1979, Philips offered customers who were distributors substantial discounts on some of its long life lamps. These discounts were in excess of the stated discounts on Philips' published price lists for the quantity of the product being purchased. These invoices show that Philips did not give Energex the same discount that other customers enjoyed. (See e.g. Tr. 316, 318-321, 323, 325-328, 334-335, 337-339, 342, 369, 370-374, 378, 391). As a result, Energex repeatedly paid more for various products purchased from Philips than distributors were paying. (Id.)

Furthermore, on a number of occasions, Philips sold products to distributors who were customers of Energex at or below the price at which Energex was selling its products to these same customers. (Tr. 925-926, 1022). In these instances Philips deviated from its published price list in which the discount a customer would receive was related to the quantity of goods purchased. (Plaintiff Exh. 423; Tr. 869-871). There was testimony from one distributor, Mr. Larsen, who was a customer of Energex, that Philips offered him products at prices below or at that being offered by Energex. (Tr. 1022). Mr. Larsen testified that GSLP's general manager, Mr. Ricchiuti, specifically offered to sell him light bulbs at prices below that at which Energex sold the product. (Tr. 1022). He testified that Mr. Richiutti asked him why he did business with Energex because they were "not going to be around long" and that Philips had the best prices and could take care of him. (Tr. 1023, 1024). Mr. Larsen testified that, based upon these conversations, it was his opinion that Philips was trying to "put Energex out." (Tr. 1024). Because of the discounts being offered by Philips, Larsen ceased purchasing...