Instant Delivery Corp. v. City Stores Co.(Lit Bros. Div.)

• Decision Date: 06 May 1968
• Docket Number: Civ. A. No. 68-262.
• Citation: 284 F. Supp. 941
• Parties: INSTANT DELIVERY CORP. v. CITY STORES COMPANY (LIT BROTHERS DIVISION), Strawbridge & Clothier, Gimbel Brothers, Inc., John Wanamaker Philadelphia, and Tose, Inc.
• Court: U.S. District Court — Eastern District of Pennsylvania

284 F. Supp. 941

INSTANT DELIVERY CORP. v. CITY STORES COMPANY (LIT BROTHERS DIVISION), Strawbridge & Clothier, Gimbel Brothers, Inc., John Wanamaker Philadelphia, and Tose, Inc.

Civ. A. No. 68-262.

United States District Court E. D. Pennsylvania.

May 6, 1968.

Harold E. Kohn, Aaron M. Fine, Dolores Korman, David Pittinsky, Philadelphia, Pa., for plaintiff.

Theodore R. Mann, Philadelphia, Pa., for City Stores Co. and Strawbridge & Clothier.

Edward W. Mullinix, Kimber E. Vought, Philadelphia, Pa., for Gimbel Brothers, Inc.

Robert W. Sayre, Philadelphia, Pa., for John Wanamaker Philadelphia.

Edwin P. Rome, Philadelphia, Pa., Desmond J. McTight, Norristown, Pa., for Tose, Inc.

SUR MOTION FOR PRELIMINARY INJUNCTION

LUONGO, District Judge.

For the past several months Instant Delivery Corp., plaintiff herein, has been performing a package delivery service for two of the four major local department stores. Recently the four stores decided to re-establish consolidated delivery. Instant and the carrier which served the other two stores competed with each other to be selected for the consolidated delivery. Instant lost out. It instituted this suit for damages against the four stores and the successful carrier, charging violations of the antitrust laws. The matter is before the Court on Instant's motion for preliminary injunction. Instant seeks to enjoin, preliminarily and until final hearing, the two stores it now serves from discontinuing the use of its services. In effect, Instant seeks an order requiring the two stores to continue to deal with it until the trial of the antitrust suit which, in the normal course of events, will not take place for several years.

Upon pleadings and proof, the Court makes the following

FINDINGS OF FACT

1. Plaintiff is Instant Delivery Corp., a New Jersey corporation, which is a common carrier and is in the business of delivering packages for retail business establishments including department, clothing, and specialty stores, and mail order houses.

2. The store defendants are City Stores Company, Lit Brothers Division (Lits), Strawbridge & Clothier (S&C), Gimbel Brothers (Gimbels) and John Wanamaker Philadelphia (Wanamaker), which operate department stores in the Eastern District of Pennsylvania.

3. Defendant Tose, Inc. is a common carrier which performs, inter alia, the service of delivering packages for retail business establishments including department, clothing and specialty stores. It transacts business within the Eastern District of Pennsylvania.

4. For approximately 30 years prior to April 1967, the four store defendants made use of a consolidated package delivery service furnished to them by United Parcel Service (UPS). The four store defendants had, over the years, found the consolidated delivery service to be the most efficient and economical method of package delivery because that arrangement made possible a greater concentration of deliveries to a given geographical area.

5. Under the consolidated delivery service, the one carrier, UPS picked up packages from each of the four stores (and other stores which made use of the service), transported them to a transfer point where the packages were sorted, re-routed, and put into smaller trucks for delivery to the purchasers of the commodities on the routes served by the smaller trucks.

6. In April 1967, there were labor difficulties between UPS and Local 107 of the Teamsters Union resulting in a cessation of package delivery and resulting ultimately, in July 1967, in UPS's terminating its operations in the Philadelphia area.

7. Following the strike in April 1967, UPS officials regularly visited each of the four stores and reported on the progress of negotiations. Thereafter, for convenience, joint meetings were held between officials of UPS and representatives of the four stores. During the early summer of 1967, a delivery committee, consisting of representatives of the four stores, was set up to discuss and deal with the delivery problem. These meetings were held periodically throughout the summer, fall and winter of 1967 on through January 1968.

8. At the time UPS left, there was no carrier in the Philadelphia area with the experience or the facilities to perform a consolidated delivery service for the four store defendants. To meet the emergency created by the departure of UPS the four store defendants temporarily abandoned consolidated delivery and sought alternative means for effecting delivery of packages to their customers.

9. In the period immediately following UPS' cessation of delivery service, three of the four store defendants used the United States Post Office for the delivery of packages within parcel post size limits and two common carriers, ABC and Shulman, for packages exceeding parcel post size. The fourth store, Wanamaker, purchased and leased delivery equipment and attempted to make deliveries, partially by its own personnel and partially by the use of common carriers to the extent that such carriers were available.

10. In about July 1967, S&C entered into an oral arrangement with Instant. At first the arrangement was for the delivery only of packages exceeding parcel post size, but later it was expanded to include parcel post size packages. On October 31, 1967 the oral arrangement was replaced by a written agreement, terminable by either party on 30 days' notice. To effectuate the arrangement between the parties, S&C purchased 25 trucks from UPS and leased them to Instant for the period that Instant was to perform delivery services for S&C. Instant understood that its services were being utilized as a temporary measure for the oncoming Christmas season, and that S&C intended to seek a more permanent solution to the delivery problem after the Christmas rush.

11. Three or four weeks later, in August 1967, Instant entered into an oral arrangement with Lits to deliver its packages. At first the arrangement covered non-mailable packages only, but it was later expanded to cover the delivery of the bulk of Lits' packages. Instant was aware when it accepted the business from Lits that it was a temporary measure for the oncoming Christmas season. To effectuate the arrangement between the parties, Lits acquired 25 trucks from UPS and leased them to Instant for the period of time that Instant was to perform delivery service for Lits.

12. From the time it entered the package delivery business in March 1966 until July 1967, Instant had performed a retail package delivery service for a relatively few mail order houses, specialty stores and other retail establishments.

13. After the acquisition of the S&C and Lits business, Instant hired some additional personnel and leased a terminal facility at Cherry Hill, New Jersey to supplement one it already had in Gloucester, New Jersey. It acquired more motor vehicles, some by purchase, but by far the greater number by short term lease from S&C and Lits. Plaintiff presented no evidence as to the terms and conditions of the lease of the Cherry Hill facility other than that it is for a term of five years. At the time of the hearing there was less than a year remaining on the lease of the Gloucester facility.

14. When Instant first proposed to perform delivery service for S&C, it proposed to do so without a union contract, intending to use an association of truck owner-operators. That proposal was rejected by S&C because it did not want a recurrence of the labor difficulties it had experienced with UPS. Instant thereupon entered into a contract with Local 676 of the Teamsters Union under which Instant was permitted to pay its drivers on a piece rate basis (incentive system) for the delivery of packages. This arrangement enabled Instant to operate the package delivery service at a relatively low per unit labor cost.

15. During the summer of 1967, Gimbels and Wanamaker offered their package delivery business to Instant which rejected the offer because it was unable to handle so great a volume.

16. In September 1967, Tose offered to perform package delivery service for Wanamaker and Gimbels. It filed applications with the Interstate Commerce Commission and with the Pennsylvania Public Utility Commission, seeking emergency rights to enable it to perform such service. Instant and, at Instant's behest, ABC protested the grant of ICC rights to Tose on the ground that the services were not needed. As part of its effort to block Tose's application for emergency rights, Instant sent letters to Gimbels and Wanamaker at the end of October 1967 advising each that it was ready, willing and able to perform package delivery service for it.

17. On or about October 2, 1967, Tose commenced delivering packages for Gimbels and Wanamaker. At about that time, Tose's president, Leonard Tose, consulted with national officers of the Teamsters Union seeking to obtain for his company a labor contract comparable to the one enjoyed by Instant. These efforts brought to the attention of Teamsters Union national officers the existence of Instant's favorable piece rate contract, which they promptly thereafter caused to be cancelled. The contract, which was not due to expire until December 4, 1969, was declared null and void by the national officers and was rescinded by telegram dated November 8, 1967 from the president of Teamsters Local 676 to Instant.

18. The termination of Instant's favorable contract resulted solely from Tose's attempt to obtain a similar contract and not from an attempt by Tose to cause the Teamsters Union to cancel Instant's contract.

19. The arrangement entered into by Gimbels and Wanamaker with Tose was intended as a temporary measure only, designed to take care of package delivery until after the 1967 Christmas season. Notwithstanding the temporary nature of the arrangement, Tose purchased from UPS 115 delivery vans and 8 larger trucks for line haul service.

20. On about December 1, 1967, the Teamsters Union placed picket lines around Instant's Cherry Hill...