Kirihara v. Bendix Corporation

• Decision Date: 21 October 1969
• Docket Number: Civ. No. 2819.
• Citation: 306 F. Supp. 72
• Parties: Paul Y. KIRIHARA, Plaintiff, v. The BENDIX CORPORATION, Fram Corporation and FC Corporation, Defendants.
• Court: U.S. District Court — District of Hawaii

306 F. Supp. 72

Paul Y. KIRIHARA, Plaintiff, v. The BENDIX CORPORATION, Fram Corporation and FC Corporation, Defendants.

Civ. No. 2819.

United States District Court D. Hawaii.

October 21, 1969.

COPYRIGHT MATERIAL OMITTED

David Berger, Philadelphia, Pa., Kashiwa & Kashiwa, Honolulu, Hawaii, for plaintiff.

J. Russell Cades and William M. Swope, of Cades, Cox, Schutte, Fleming & Wright, Honolulu, Hawaii, Charles F. Donnelly and B. G. Andrews, Detroit, Mich., of counsel, for defendants.

PENCE, Chief Judge.

STATEMENT OF THE CASE

To this action for treble damages brought under § 4 of the Clayton Act, defendants, at the pleading stage, have moved to dismiss under Rule 12(b), F.R.Civ.P., for failure to state a cause of action.

Plaintiff's amended complaint alleges that he, Kirihara, for some thirty years prior to May 23, 1967, was the exclusive warehouse distributor in Hawaii of Fram brand Automotive Oil Filters. He sells auto parts, but sales from Fram filters represented the major portion of his business and was the only brand of oil filters which he stocked and sold.

Defendant Fram Corporation¹ is the third largest filter manufacturer in the United States.² Defendant Bendix Corporation (Bendix) is one of the largest sellers of automotive products in the United States, but in 1966-67 Bendix manufactured no automotive filters but did purchase some for resale to some vehicle manufacturers. Bendix is a leading manufacturer of liquid separators and aerospace filters—items also manufactured by Fram. Bendix' sales in 1966 (from all products sold by it) were over $1 billion and Fram's were over $66 million.³

In February 1967 Bendix and Fram agreed upon the acquisition of Fram by Bendix, with the transfer of assets from Fram to Bendix to be consummated about June 30, 1967. On May 23, 1967 Fram cancelled Kirihara's warehouse distributor agreement effective as of May 31, 1967, and the verbal agreement between the two that Kirihara was to be the exclusive distributor of Fram's products in Hawaii was also cancelled as of the same date.^3A

Charles W. Carter Co., Inc. (Carter), a Hawaii corporation, had been a Bendix distributor prior to 1967 (and still is), and a competitor of Kirihara. Upon cancelling Kirihara's Fram distributorship, Fram, on June 1, 1967 made Carter the exclusive warehouse distributor for Fram products, and thereafter Bendix-Fram refused to sell Fram products to Kirihara. Carter and Bendix-Fram have agreed that Carter will not distribute any automotive filters other than Fram. Carter has the exclusive warehouse distributorship of Fram automotive filters in Hawaii, and since June 1, 1967 Carter and Bendix-Fram have kept their agreement in operation. Bendix-Fram prices to Carter for Fram's products are "unreasonably and discriminatorily low * * lower than those prices at which the defendants sell `Fram' products of like grade and quality" to distributors on the mainland U.S.A.

On June 30, 1967 the Federal Trade Commission (FTC) charged that the acquisition of Fram by Bendix violated § 7 of the Clayton Act, and § 5 of the FTC Act. On December 19, 1967 the FTC noted the consummation of the merger, for the purpose of its complaint. Bendix agreed with the FTC that the business and assets of Fram should be continued as a separate and independent competitive entity pending the termination of the FTC action.

Kirihara then concludes that: (a) the merger actions constitute an unlawful conspiracy and substantially restrain and lessen competition, and "tend to create a monopoly in the production, sale and distribution of automotive filters aerospace filters and liquid separators in the United States"; (b) the agreements between Bendix, Fram and Carter were a conspiracy in the restraint of trade in the production, sale and distribution of automotive filters, etc. (see supra); (c) Bendix and Fram have attempted and are attempting "individually and/or in concert, to monopolize the production, distribution * * * etc. of automotive filters * * * etc." (see supra); (d) the Bendix-Fram conspiracies have eliminated actual and potential competition between Bendix and Fram in the manufacture and sale of automotive filters, etc., and have lessened competition in the filter field generally, having eliminated Fram as an independent competitive factor; (e) concentration in the manufacture, sale and distribution of filters has been and will be increased substantially; and (f) the merger results in a competitive advantage to the defendants with detriment to actual and potential competition, curtailing the entrance of new firms and growth of smaller filter manufacturing companies, as well as lessening actual and potential competition among distributors of automotive filters, with a dangerous probability of defendants acquiring a monopoly of the filter business.

Kirihara then maintains that he has been "substantially, irreparably and permanently injured in his business and property" by the above unlawful conspiracies and agreements between Bendix, Fram and Carter, in that (a) he has lost the major portion of his business by virtue of the cancellation of his Fram distributorship; and because he cannot continue to distribute Fram products; (b) he cannot compete with defendants and Carter or other similar competitors in the distribution and sale of oil filters; (c) his filter business "has effectively been destroyed"; and (d) Bendix-Fram's unlawful acts prevent his "profitable and effective re-entry into the" profitable filter market in Hawaii.

Plaintiff therefore asks that: (1) Bendix-Fram be enjoined from merging; (2) the merger agreement be rescinded; and (3) Kirihara be reinstated as Fram's exclusive distributor in Hawaii and be awarded treble damages under Clayton § 4. (15 U.S.C. § 15).

DEFENDANTS' MOTION

Defendants have moved to dismiss the complaint basically on the grounds that (1) the complaint violates Rule 8, F.R. Civ.P.; and fails to state a claim upon which relief can be granted under (2) Sherman Act §§ 1 and 2 (15 U.S.C. §§ 1, 2), (3) Clayton Act § 3 (15 U.S.C. § 14), (4) Clayton Act "Section 2(a) of the Robinson-Patman Act (15 U.S.C. § 13 (a)) sic,"⁴ and (5) Clayton Act § 7 (15 U.S.C. § 18).

PROBLEMS RAISED

1. Violation of Rule 8, F.R.Civ.P.

The complaint, thankfully, is more than a simple sketch or notice pleading. This court believes that in potentially complex cases, particularly in cases involving violations of the antitrust laws, the plaintiff should go beyond the "short" requirements of Rule 8 if necessary to present a "plain", i. e., understandable and factual statement of the alleged antitrust violations. The pleading in this case is nowhere near as prolix and as overburdened with immaterial allegations of immaterial facts and conclusatory statements as this court found in Bailey's Bakery, Ltd. v. Continental Baking Company, 235 F.Supp. 705 (D.Hawaii 1964). The amended complaint here is but 13— not 78—pages long, and the facts alleged have materially assisted this court in resolving the motion to dismiss. Although not carefully drafted, and clearly hastily compiled in parts,⁵ it cannot be dismissed as violative of Rule 8.⁶

Defendants' motion to strike the complaint as violating Rule 8, F.R.Civ.P., is denied.

2. Violation of Sherman §§ 1 and 2.

In his memorandum in support of his complaint, plaintiff states⁷ (a) that he has alleged that Fram is one of the three largest manufacturers of automotive filters in the United States; (b) that Bendix is one of the largest manufacturers of automotive filters in the United States;⁸ (c) that Bendix manufactures or purchases for resale automotive filters;⁹ (d) that Bendix and Fram are competitors, and in some instances potential competitors in automotive filters, aerospace filters and liquid separators;¹⁰ (e) "that Fram, Bendix and others"¹¹ entered into an unlawful agreement and conspiracy that Fram would merge into Bendix, and Fram would terminate plaintiff as its distributor in Hawaii and transfer the exclusive distributorship of Fram products in Hawaii to Carter. Plaintiff argues that the effects of these two agreements were to substantially restrain competition and that defendants have attempted thereby to monopolize the "production, sale and distribution of automotive filters"; (f) that he has lost a major portion of his business, is unable to compete "with defendants"¹² and his filter business has been destroyed; (g) that defendants' business is enhanced and defendants have prevented plaintiff from re-entering the market for sale and distribution of oil filters.

Then plaintiff concludes: "The aforementioned allegations * * * show a concerted activity in terminating and refusing to deal with appellee sic."¹³

Plaintiff has cited Poller v. Columbia Broadcasting System, Inc., 368 U.S. 464, 82 S.Ct. 486, 7 L.Ed.2d 458 (1961), as supporting its contention that summary dismissal of its Sherman § 1 count is improper. As the Court stated:

"Poller alleges and the affidavits, depositions, and exhibits indicate much more than the free exercise by CBS of the granted right of cancellation. A conspiracy is alleged to restrain trade in the Milwaukee television market; to eliminate WCAN from that market; to secure its facilities at depressed prices; and to occupy the UHF band in that market exclusively. The right of cancellation was merely one of the means used to effectuate this conspiracy." 368 at 469, 82 S.Ct. at 489.

It is manifest from the pleadings that the only possible market in which the plaintiff can have any interest here is the automotive filter market in the State of Hawaii. There is no allegation or inference that the alleged "conspiracy" or combination between Fram and Bendix was to restrain trade in the Hawaii automotive filter market, to eliminate plaintiff from that market; to secure his facilities at depressed prices; or to occupy the State automotive filter market exclusively. All that can be determined from the pleadings is that the defendants...