General Electric Company v. Hess Brothers, Inc.

• Decision Date: 19 August 1957
• Docket Number: Civ. A. No. 21237.
• Citation: 155 F. Supp. 57
• Parties: GENERAL ELECTRIC COMPANY v. HESS BROTHERS, Inc.
• Court: U.S. District Court — Eastern District of Pennsylvania

155 F. Supp. 57

GENERAL ELECTRIC COMPANY v. HESS BROTHERS, Inc.

Civ. A. No. 21237.

United States District Court E. D. Pennsylvania.

August 19, 1957.

COPYRIGHT MATERIAL OMITTED

Henry W. Sawyer III, Drinker, Biddle & Reath, Philadelphia, Pa., for General Electric Co.

Orrin E. Boyle, Allentown, Pa., for Hess Brothers, Inc.

VAN DUSEN, District Judge.

The trial judge makes the following Findings of Fact and Conclusions of Law:

I. Findings of Fact

1. Plaintiff's requested Findings of Fact Nos. 1, 2, 4-15, and defendant's requested Findings of Fact Nos. 2, 6-23,¹ 25, and 26 are adopted as the Findings of this court.

Defendant's requested Findings of Fact Nos. 84-91 are adopted as being substantially correct (see affidavits attached to the stipulation filed March 29, 1957).

The advertising of defendant preceding and during its sale from August 24 to September 4, 1956, of plaintiff's fair-traded products at less than the minimum fair trade prices and the sales by defendant at these prices during these ten days caused a general collapse in plaintiff's ability to maintain fair trade prices in defendant's trading area (see, for example, Exhibits P-2, P-3, P-4, P-5, P-7, P-8 and P-9).

2. Plaintiff's requested Finding of Fact No. 16 is adopted with the following modifications:

(a) Benco Sales Company

Add on page 5, following the activity on the date of July 11, 1956:

"Aug. 8, 1956. Plaintiff received notice from the defendant in a letter dated August 8, 1956 (Exhibit D-23), as to the sale of a General Electric fair-traded product below the fair trade price.

"Aug. 10, 1956. Plaintiff authorized its agents to place an order by mail for goods at less than the fair trade price."

Add on page 5 plaintiff's answer to defendant's Interrogatory No. 5-j (see Clerk's document No. 19) following the activity of September 12, 1956.

(b) Save-All, Inc.

Add on page 5 plaintiff's answer to defendant's Interrogatory No. 5-a (see Clerk's document No. 19) following the activity of June 21, 1956.

(c) Lee-Mart

Add on page 5, following the activity on the date of July 9, 1956:

"July 13, 1956. Plaintiff received notice from the defendant in a letter dated July 9, 1956, as to the sale of a General Electric fair-traded product below the fair trade price. (N. T. 357)."

Add on page 6 plaintiff's answer to defendant's Interrogatory No. 5-b (see Clerk's document No. 19) following the activity of August 28, 1956.

(d) Bargain Center (Freemansburg)

Add the following on page 8, following the title "Bargain Center (Freemansburg):"

"June 27, 1956. Plaintiff received notice from General Electric Supply Co. in Allentown reporting a verbal complaint made to it from defendant (N. T. 299-300).

"June 28, 1956. Plaintiff wired Bargain Center advising them of General Electric's fair trade prices and General Electric's intention to enforce fair trade prices. Also, plaintiff mailed its No. 1 warning letter by certified mail and prepared a shopping double-purchase authorization, which was dated July 2, 1956 (N. T. 300)."

Add on page 9, following the activity on the date of July 6, 1956:

"July 6, 1956. Plaintiff received back its No. 1 warning letter marked "Refused" (see Exhibit P-14) and authorized Pinkerton Detective Agency to personally deliver the same letter (N. T. 315-6).

"July 13, 1956. Plaintiff received notice from the defendant in a letter dated July 9, 1956, repeating the complaint of June 29, 1956, noted above, as to the sale of a General Electric fair-traded product below the fair trade price (N. T. 316)."

Add on page 9 plaintiff's answer to defendant's Interrogatory No. 5-c (see Clerk's document No. 19) following the activity of August 10, 1956.

(e) Roth Brothers

Add on page 9, following the activity on the date of August 8, 1956:

"Aug. 8, 1956. Plaintiff mailed its No. 1 warning letter by certified mail with return receipt requested, and prepared a shopping authorization dated August 16, 1956 (N. T. 320).

Add on page 10 plaintiff's answer to defendant's Interrogatory No. 5-d (see Clerk's document No. 19) following the activity of August 27, 1956.

(f) A. O. Gehman & Sons

Add on page 10, following the activity on the date of August 8, 1956:

"Aug. 8, 1956. Plaintiff mailed its No. 1 warning letter by certified mail, with return receipt requested, and prepared a shopping authorization dated August 16, 1956 (N. T. 324).

"Aug. 10, 1956. A return receipt showing the delivery of notice No. 1 came back to plaintiff bearing the date of receipt of August 10, 1956 (N. T. 325).

"Aug. 16, 1956. Plaintiff instructed the Pinkerton Agency to make a shopping (N. T. 325).

"Aug. 27, 1956. Second notice received from defendant of separate violation (see affidavit of John C. Boettinger, Clerk's document No. 4)."

Add on page 10 plaintiff's answer to defendant's Interrogatory No. 5-e (see Clerk's document No. 19) following the activity of August 27, 1956.

(g) Phillips Music House

Add on page 11, following the activity on the date of August 8, 1956:

"Aug. 8, 1956. Plaintiff mailed its No. 1 warning letter by certified mail and prepared a shopping authorization dated August 15, 1956 (N. T. 328).

"Aug. 10, 1956, and August 15, 1956. Plaintiff authorized shoppings."

Add on page 11 plaintiff's answer to defendant's Interrogatory No. 5-f (see Clerk's document No. 19) following the activity of August 24, 1956.

(h) Greene's Electric

Add on page 12 plaintiff's answer to defendant's Interrogatory No. 5-g (see Clerk's document No. 19) following the activity of August 27, 1956.

3. Plaintiff's requested Finding of Fact No. 17 is adopted with the following modifications:

Add on page 13, after line 16, plaintiff's answer to defendant's Interrogatory No. 5-i (see Clerk's document No. 19); and on page 13, at the end of requested Finding of Fact No. 17, add plaintiff's answer to defendant's Interrogatory No. 5-h (see Clerk's document No. 19).

4. The record contains no proof of when, if at all, defendant notified plaintiff that D. Weiman was selling General Electric fair-traded products below the fair trade prices. Plaintiff took the action as to D. Weiman in the period since September 19, 1956, described in plaintiff's answer to defendant's Interrogatory No. 5-k (see Clerk's document No. 19).

5. Plaintiff's answer No. 4-d to defendant's interrogatories (see Clerk's document No. 19) is adopted as a correct statement of the facts.

6. Plaintiff's requested Findings of Fact Nos. 18-24² are adopted as the findings of this court.

All requests for Findings of Fact which are inconsistent with the foregoing are denied.

Discussion

As indicated by Finding of Fact No. 1, this case has its background in defendant's well-publicized belief that the policy of minimum fair trade prices is not only economically unsound but also illegal. After defendant issued advertisements in several newspapers, stating that it would sell plaintiff's fair-traded products for amounts below the specified minimum prices, the plaintiff filed a motion for a temporary injunction, which was not granted until after the completion of hearings lasting four days (August 29 to September 1, 1956). After injunction issued on September 4, 1956, defendant asked leave to file additional affidavits and interrogatories, and the record was not complete until the filing of a second stipulation on August 15, 1957. There are now before the court defendant's motion to vacate the preliminary injunction and plaintiff's motion to make it permanent.

The federal constitutional objections to the application of the Pennsylvania Fair Trade Act (73 P.S. §§ 7 and 8) to this defendant under the facts of this case have been rejected by the decisions of the United States Courts of Appeal for the Third and Sixth Circuits in Norman M. Morris Corp. v. Hess Brothers, Inc., 3 Cir., 1957, 243 F. 2d 274, and Sunbeam Corporation v. Richardson, 6 Cir., 1957, 243 F.2d 501.³ See, also, Schwegmann Bros. Giant Super Markets v. Eli Lilly & Co., 5 Cir., 1953, 205 F.2d 788, certiorari denied 1953, 346 U.S. 856, 74 S.Ct. 71, 98 L.Ed. 369. The objections to the Act based on the Pennsylvania Constitution should be presented to the Pennsylvania Supreme Court in view of the decision of that court holding the Act constitutional⁴ and the Pennsylvania rule that, where an appellate court has passed on any constitutional objection to an Act of Assembly, it is presumed to have passed on all constitutional objections to that Act.⁵ Cf. Norman M. Morris Corp. v. Hess Brothers, Inc., supra, 243 F.2d at page 279; Sunbeam Corporation v. Richardson, supra, 243 F.2d at pages 503-504.

Also, defendant contends that the exemptions contained in a footnote to plaintiff's "List of Fair Trade Minimum Retail Prices Effective July 9, 1956" (see Exhibit P-6) are violative of the specific restrictions to fair trade price-fixing in the McGuire amendment, 15 U.S.C.A. § 45(a), 66 Stat. 632 (1952), of 5(a) of the Federal Trade Commission Act, and the Miller-Tydings amendment, 15 U.S. C.A. § 1, 50 Stat. 693 (1937), of § 1 of the Sherman Act.

Both Acts provide for the legality of minimum price-fixing agreements between plaintiff and its retailers as an exemption from the federal anti-trust legislation, but specifically do not include within the scope of the legalized agreements "any contract or agreement providing for the establishment or maintenance of minimum resale prices * * between persons, firms, or corporations in competition with each other."

The relevant portion of the language containing the exemptions to plaintiff's fair trade price contracts reads as follows:

"The indicated retail prices do not apply to sales made to employees of the General Electric Company or to sales by distributors or dealers of these products to their own employees, or to sales to governmental agencies or to commercial or institutional establishments buying for their own use and not for resale."

These exemptions are a voluntary relinquishment by plaintiff of its right under the fair...