Helfenbein v. International Industries, Inc., 20245

• Decision Date: 04 March 1971
• Docket Number: No. 20245,20246.,20245
• Citation: 438 F.2d 1068
• Parties: Robert J. HELFENBEIN and Circle Investments of Missouri, Inc., Appellants, v. INTERNATIONAL INDUSTRIES, INC., et al., Appellees. Robert J. HELFENBEIN and Crescent Investments of Iowa, Inc., Appellants, v. INTERNATIONAL INDUSTRIES, INC., et al., Appellees.
• Court: U.S. Court of Appeals — Eighth Circuit

438 F.2d 1068 (1971)

Robert J. HELFENBEIN and Circle Investments of Missouri, Inc., Appellants, v. INTERNATIONAL INDUSTRIES, INC., et al., Appellees.

Robert J. HELFENBEIN and Crescent Investments of Iowa, Inc., Appellants, v. INTERNATIONAL INDUSTRIES, INC., et al., Appellees.

Nos. 20245, 20246.

United States Court of Appeals, Eighth Circuit.

January 14, 1971.

Rehearing Denied March 4, 1971.

Sheridan Morgan, Mark J. Klein, Kansas City, Mo., Barton P. Cohen, Overland Park, Kan., for appellants.

Thomas J. Wheatley, Maurice J. O'Sullivan, Jr., Kansas City, Mo., Harry L. Gershon, Los Angeles, Cal., for appellees.

Before MATTHES, Chief Judge, LAY, Circuit Judge, and REGISTER, District Judge.

LAY, Circuit Judge.

Suits for treble damages for alleged violation of §§ 1 and 2 of the Sherman Act (15 U.S.C.A. §§ 1 and 2) and § 3 of the Clayton Act (15 U.S.C.A. § 14) have been filed in the United States District Court for the Western District of Missouri against the defendants International Industries, Inc., I.H.O.P. of Cook County, Inc., and International House of Pancakes of Arizona, Inc. (hereinafter grouped as International). The plaintiffs, Robert J. Helfenbein and his wholly owned corporations Circle Investments of Missouri, Inc. and Crescent Investments of Iowa, Inc., subleased restaurants and equipment from International under franchise agreements. Plaintiffs assert that the leases require tie-in agreements which violate both federal and state antitrust laws. The plaintiffs Helfenbein and Circle Investments opened a restaurant in Kansas City, Missouri, under the above agreements in January 1967; Helfenbein and Crescent Investments commenced a similar operation in Des Moines, Iowa, in December 1965. On or about May 19, 1969, defendants evicted plaintiffs from their restaurant premises in Des Moines by means of an unlawful detainer action in the Iowa state courts. A similar unlawful detainer action in the State of Missouri has been threatened relating to the Kansas City premises. In addition, it is alleged that the defendants have demanded that plaintiffs, under the terms of their lease agreements, submit to arbitration in Los Angeles, California all amounts purportedly due defendants for various items including rent, equipment use, and goods and services furnished plaintiffs in the past. The instant appeal arises because of the district court's refusal to grant a preliminary injunction against the defendants enjoining the arbitration proceedings as well as the threatened unlawful detainer action in state court. We affirm the district court's action.

The arbitration proceedings requested concern the amount allegedly due the defendants for the: (1) unpaid balance of principal and interest on a promissory note executed by Robert J. Helfenbein; (2) unpaid and past due amounts on two equipment leases; (3) unpaid and past due rent on two subleases of restaurant premises; (4) unpaid and past due amounts for goods sold and delivered; (5) unpaid and past due management services fees; and (6) unpaid and past due advertising fees. The total amount exceeds $87,200. There appears to be little or no dispute over the items or the amount involved. Plaintiffs object to the arbitration procedures in Los Angeles because they fear that they will lose their right to assert the defense of invalidity of the contracts under state laws. In Missouri, as well as Iowa, there exist penalty provisions attached to violations of the restraint-of-trade laws purportedly making the contracts void and unenforceable. See Mo.Ann.Stat. § 416.010-416.050 (1952); and Iowa Code § 553.1 (1966). Plaintiffs properly urge that arbiters have no jurisdiction to pass upon the substantive aspect of the antitrust laws. American Safety Equipment Corp. v. J. P. Maguire & Co., 391 F.2d 821 (2 Cir. 1968); A. & E. Plastik Pak Co. v. Monsanto Co., 396 F.2d 710 (9 Cir. 1968). The difficulty in reliance on these cases is, however, they in no way suggest an irreparable harm to plaintiffs so as to enjoin the arbitration procedure if needed.¹ Once the matter is arbitrated, the sum so determined must still be pleaded in a court of competent jurisdiction and reduced to judgment to enforce collection. Plaintiffs may at that time urge whatever defenses to the arbitration award they might have under the antitrust laws.² Under these circumstances a temporary injunction need not issue to enjoin the arbitration. By our ruling we do not entertain the questions as to the effect or proper application of any state law to the present facts. The case is not yet ripe for determination of these issues.

Plaintiffs additionally urge that unless a preliminary injunction issues to enjoin their eviction from the restaurant premises they will be denied their statutory defense provided under state law. The argument is made that once the claims are paid it will be too late to obtain any benefit from these defenses. However, the threatened eviction is premised upon the plaintiffs' default in payment for the various items previously listed including a default on the promissory note given as part of the initial consideration for the franchise and rent for the premises and equipment. Admittedly there exists no defense as to these items under the state laws.³ The contract lease between the parties is clear and unequivocal that any default thereunder may subject plaintiffs to summary eviction. Under these circumstances there exists no equitable ground or authority for the federal courts to intervene. Furthermore, plaintiffs have not lost their right to raise these defenses once the defendants assert their claim.

There exists additional reason for denying injunctive relief. There is no authority under the federal antitrust laws to enjoin state enforcement or remedy for collection of ordinary debts incurred for goods delivered or services rendered. As the Supreme Court said in Bruce's Juices, Inc. v. American Can Co., 330 U.S. 743, 750, 67 S.Ct. 1015, 1018, 91 L.Ed. 1219 (1947): "The Act prescribes sanctions, and it does not make uncollectibility of the purchase price one of them." See also Kelly v. Kosuga, 358 U.S. 516, 79 S.Ct. 429, 3 L. Ed.2d 475 (1959). Injunctive relief under § 16 of the Clayton Act (15 U.S.C.A. § 26) may issue only for "loss or damage" by reason of a violation of the federal antitrust law. Plaintiffs only remotely allude to their potential loss or damage under federal law. However, there is no attempt in either the arbitration or eviction proceedings to enforce the very conduct (that is, the tie-in sale) prohibited by the Clayton or Sherman Act. Cf. Continental Wall Paper Co. v. Louis Voight and Sons Co., 212 U.S. 227, 29 S.Ct. 280, 53 L.Ed. 486 (1909). The gravamen of plaintiffs' "loss or damage," as alleged...