Golden v. Kentile Floors, Inc.

Decision Date12 May 1975
Docket NumberNo. 74-2452,74-2452
Citation512 F.2d 838
Parties1975-1 Trade Cases 60,323 Partick Edwin GOLDEN, Jr., Plaintiff-Appellee-Cross Appellant, v. KENTILE FLOORS, INC., et al., Defendants-Appellants-Cross Appellees
CourtU.S. Court of Appeals — Fifth Circuit

Taylor W. Jones, Atlanta, Ga., Irving R. Krosner, New York City, for defendants-appellants-cross appellees.

Joe T. Taylor, III, A. Orville Bracey, III, Atlanta, Ga., for plaintiff-appellee-cross appellant.

King & Spalding, Atlanta, Ga., Kelley, Drye, Warren, Clark, Carr & Ellis, New York City, for Mfg. Hanover Trust Co.

Appeals from the United States District Court for the Northern District of Georgia.

Before BELL, THORNBERRY and GEE, Circuit Judges.

THORNBERRY, Circuit Judge:

This appeal arises from a nonjury trial in which the plaintiff, Patrick Edwin Golden, Jr., obtained a judgment against the defendant, Kentile Floors, Inc., directing the latter to reinstate plaintiff into the company's "Profit-Sharing Plan for Salaried Employees," and awarding plaintiff $5,000 in penalties pursuant to former 29 U.S.C. § 308(b). 1 Kentile appeals these portions of the judgment, and Golden cross-appeals the district court's rejection of a Sherman Act damages claim, the court's refusal to award some $58,000 in additional statutory penalties, and the denial of attorney's fees. 2 We affirm the judgment insofar as it denies relief under the antitrust laws and denies attorney's fees. We reverse and render judgment in favor of Kentile with respect to reinstatement of Golden into the profit-sharing plan and the award of statutory penalties. Consequently, it becomes unnecessary to decide whether the district court, in its discretion, may award less than $50 per day when the court has determined that a party is entitled to a penalty award under § 308(b). 3

I. FACTS

Although the parties vigorously debate the range of ultimate inferences that were permissibly available to the trial court, there has never been any material dispute over the basic sequence of events that led to this controversy. Plaintiff Golden secured employment with Kentile around November 1, 1949. The employment continued until December 5, 1969, at which time his resignation became final. During his tenure with Kentile, Golden advanced from "sales representative" to the position of "Southeastern Regional Sales Manager."

On January 1, 1953, Kentile established the Kentile, Inc. Profit-Sharing Plan for Salaried Employees, which Golden joined on November 20, 1953. At that time he executed a document, which provided in part as follows:

I have read the Kentile, Inc. Profit-Sharing Plan for Salaried Employees, and the Trust Agreement thereunder, both dated as of January 1, 1953.

I hereby agree to observe and be bound by all of the terms, conditions and provisions of the said Plan and Trust Agreement as a party, and I had (sic) subscribed my name to both of them.

The plaintiff gave unblemished deposition testimony that he had received a copy of the Profit-Sharing Plan and had read it and was familiar with its terms when he signed the document.

We mention several of the plan's "terms, conditions, and provisions." Since the plan's inception, questions concerning the rights of members have fallen within the jurisdiction of a Profit-Sharing Committee. This committee, since 1953, has consisted of the same five persons, three of whom are plan members and two of whom have no interest in the plan. Also since the plan's inception, investment management has been committed to the sole trusteeship of the Manufacturer's Hanover Trust Company. 4 No persons other than the members of the committee, its counsel and staff, and the trustee have ever exercised power or control over the plan's assets or the rights of its members, nor have any other persons held the authority to do so. The plan has always been funded solely by Kentile, and participants have never been permitted to make contributions of their own. With respect to vesting, the plan provides that the contributions made by Kentile shall not confer any right, title, or interest upon a member until the funds are actually paid out under the committee's authority as set forth in the plan.

This dispute focus narrowly on one of the plan's specific clauses. At all times since January 1, 1958, the plan has provided as follows:

Article VII, Section 12(b):

If the Committee determines that any Member whose employment has terminated by reason of retirement or other cause, is, without the written approval of the Employer, engaged or employed in any occupation, or in a business, which, in the Committee's sole opinion, is in competition with the Employer, and if after 5 days' notice by Registered Mail, such Member fails to discontinue such engagement or employment, the share of such Member then held by the Trustee shall be deemed forfeited upon the certification of the Committee.

Between 1953 and 1958, the plan contained essentially the same forfeiture feature, except that a member had sixty days following notice from the committee in order to avoid forfeiture by ceasing competitive employment. The 1958 amendment does not inject a material fact into this case in that if the committee's action which is presently challenged may not be disturbed, then the plaintiff necessarily forfeited his interest under either the original plan or the amendment, as he continued to work for the employer determined to be a competitor of Kentile for more than sixty days after receipt of the committee's notice by registered mail.

On November 14, 1969, plaintiff tendered his formal letter of resignation to Mr. David D'O. Kennedy, who was Kentile's president, board chairman, and a member of the Profit-Sharing Committee. In this letter the plaintiff announced that he had "joined with a small group of men to form a new carpet company, which will be called Commander Carpets. We will construct a production facility and home office in Cartersville, Georgia with plans to initially market four (4) qualities through sales agents." Plaintiff also expressed his hope that the committee, upon receipt of this news, "would not evaluate such a new company to be classified a competitor." Nonetheless, plaintiff admitted in his deposition that although he did not personally feel that he was going into competition with Kentile, he was aware on November 14, 1969 that he might be classified a competitor. One major reason for the plaintiff's decision to change jobs stands out in the record, and is not subject to serious question: he simply thought he could improve his opportunities and earn more income with the new firm. Although he had mentioned his awareness of a possible competition problem in the resignation letter, plaintiff did not then request from the committee a response thereto, nor did he request such a response during his "short" time at Kentile up to December 5. 5

At the time of plaintiff's resignation, Kentile was marketing floor coverings, including tufted carpeting, throughout the Southeast, and plaintiff stood in direct charge of Kentile's sales in Alabama, Florida, Georgia, Louisiana, Mississippi, the Carolinas, and Tennessee. During plaintiff's ensuing employment as vice president of Commander Carpets, he made carpet sales for Commander in Florida, Georgia, Louisiana, Mississippi, South Carolina, and Tennessee. similarly, plaintiff made sales for Commander to several distributors who were likewise Kentile customers. He also contacted other Kentile distributors in unsuccessful attempts to sell Commander's products. The distributors contacted by plaintiff initially on behalf of Kentile, and later on behalf of Commander, customarily handled several more or less qualitatively equivalent lines of carpet. Although he denied that these distributors were purchasing carpet from Kentile similar to the carpet he sold for Commander, plaintiff admitted in his deposition that the manufacturers of various lines of carpet competed with each other for the business of the distributors. He also testified to an awareness that, to a varying degree depending on the consumer's intended use, all types of carpet are competitive with each other and tufted carpets are sometimes competitive with other floor coverings manufactured by Kentile. This thesis was corroborated by the deposition testimony of another witness, Mr. John Shevlin, who added that "an awful lot depends on the person doing the selling job, which way he points the customer."

There is no dispute that during plaintiff's term with Commander, that company manufactured or marketed at least three types of carpet, one of which (a "70/30 acrylic level loop") was highly competitive with Kentile's "Homestake, Pattern No. 721." Further, uncontradicted deposition testimony by Mr. Shevlin indicated that at all pertinent times Kentile had the raw materials, equipment, and manpower to manufacture and market carpeting identical to the three types produced by Commander. In essence, the plaintiff does not and cannot contradict the overwhelming evidence that he engaged in competition with Kentile while employed by Commander. Nor has he contended during this litigation that the committee's determination to that effect was factually erroneous; nor was such a finding made by the district court.

Following his letter of resignation, plaintiff received no official word from Kentile concerning his membership status in the profit-sharing plan for approximately four-and-a-half months. Then, around April 8, 1970, he received from the committee the registered letter, dated April 1, which called his attention to Article VII, Section 12(b) of the plan, supra, and which notified him that his share of the fund would be forfeited if he did not terminate his employment with Commander during the next five days. Despite this notice, plaintiff took no step toward terminating with Commander. Instead, he wrote a "personal" letter to Mr. Jack Clegg, a Kentile...

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