Klein v. Lionel Corporation, Civ. A. No. 1671.

• Decision Date: 18 January 1956
• Docket Number: Civ. A. No. 1671.
• Citation: 138 F. Supp. 560
• Parties: Philip KLEIN, Plaintiff, v. The LIONEL CORPORATION, a New York corporation, Rosenbaum's, Inc., a Delaware corporation, John Wanamaker Wilmington, Incorporated, a Delaware corporation, Sears, Roebuck and Co., a New York corporation, and Strawbridge & Clothier, a Pennsylvania corporation, Defendants.
• Court: U.S. District Court — District of Delaware

138 F. Supp. 560

Philip KLEIN, Plaintiff, v. The LIONEL CORPORATION, a New York corporation, Rosenbaum's, Inc., a Delaware corporation, John Wanamaker Wilmington, Incorporated, a Delaware corporation, Sears, Roebuck and Co., a New York corporation, and Strawbridge & Clothier, a Pennsylvania corporation, Defendants.

Civ. A. No. 1671.

United States District Court D. Delaware.

January 18, 1956.

John Van Brunt, Jr., and David Snellenburg, II (of Killoran & Van Brunt), Wilmington, Del., for plaintiff.

Thomas Cooch and Thomas S. Lodge (of Connolly, Cooch & Bove), Wilmington, Del., for defendant Lionel Corp.

Clement C. Wood (of Young & Wood), Wilmington, Del., for defendant Rosenbaum's Inc.

Henry M. Canby and James T. McKinstry (of Richards, Layton & Finger), Wilmington, Del., and Harry E. Sprogell and Joseph Ewing (of Saul, Ewing, Remick & Saul), Philadelphia, Pa., for defendant John Wanamaker Wilmington, Inc.

Richard F. Corroon (of Berl, Potter & Anderson), Wilmington, Del., and J. F. Cleff (of Lederer, Livingston, Kahn & Adsit), Chicago, Ill., for defendant Sears, Roebuck & Co.

Edwin D. Steel, Jr., and William S. Megonigal, Jr. (of Morris, Steel, Nichols & Arsht), Wilmington, Del., and Thomas B. K. Ringe, Miles W. Kirkpatrick and Frank L. Luce (of Morgan, Lewis & Bockius), Philadelphia, Pa., for defendant Strawbridge & Clothier.

RODNEY, District Judge.

This is an action for treble damages under the Robinson-Patman Act of 1936.¹ Present questions arise from motions for summary judgment which have been filed on behalf of all parties. The facts will be here set out only in such detail as may be necessary to understand the issues involved.

Klein, the plaintiff, is a retailer in Wilmington, Delaware. Klein, among other items dealt in, sells toy electric trains manufactured by Lionel, one of the defendants. Klein sells in Wilmington in competition with Rosenbaum, Wanamaker, Sears and Strawbridge, the remaining defendants. Klein does not and has not purchased any merchandise directly from Lionel, the manufacturer and defendant. Klein purchases his Lionel products from General Electric Supply Co. and Edward K. Tryon, jobbers or middlemen, and at a discount from the retail price of 40 per cent. It is alleged that Lionel, the manufacturer, at the times complained of maintained a uniform schedule of discounts as follows:

(a) Chain stores and mail order houses 40% and 20% (b) Department stores 45% (c) Miscellaneous accounts 40% and 5%²

Lionel sells to the jobbers or middlemen such as General Electric Supply Co. and Edward K. Tryon with the same discount (40 and 20%) that it sells to chain stores and mail order houses.

All parties have filed motions for summary judgment as follows:

(a) Klein filed a motion for summary judgment against Lionel alone. This motion was abandoned at the argument and motion denied, and is not further considered herein.

(b) (1) Lionel (together with all of the other defendants) has moved for summary judgment on the ground that no cause of action exists in Klein because it is apparent and conceded that Klein is not a purchaser from Lionel and, it is contended, that this is required by the statute.

(b) (2) Lionel's motion is based on an additional ground that no recoverable damages are alleged by Klein.

(c) (1) As indicated all the remaining defendants, Rosenbaum's Inc., John Wanamaker, Wilmington, Incorporated, Sears Roebuck & Co., and Strawbridge & Clothier have moved for summary judgment on the ground that Klein is not a purchaser from Lionel.

(c) (2) The defendants, other than Lionel, have moved for judgment on the additional ground that the action as to them is based upon their knowingly having accepted an unlawful discount whereas, it is alleged, that it is clearly shown by the plaintiff himself that no such knowledge was had by them.

The main question arises from the motion of all the defendants largely based upon the established fact that Klein, the plaintiff, is not and has not been a purchaser of goods from Lionel, the defendant charged with making unlawful discriminations.

Before considering the language of the Act under which the claim of the plaintiff is based, we must first definitely determine the state of facts and the contentions of the plaintiff with reference to which the law must be applied.

Lionel, the manufacturer, as above stated, sells to chain stores and mail order houses at a discount from the retail price of 40% plus 20% (equivalent to 52%); it sells to jobbers or middlemen at precisely the same discount of 40% plus 20%. Klein, the plaintiff, does not and has not bought from Lionel. He buys and has bought only from the jobber or middleman at a discount of 40%.

Klein contends that since he is in competition as a retailer with the chain stores, mail order houses and department stores he is entitled to the largest discount as enjoyed by any of them, viz., 40% plus 20%. He contends that since he can only buy from a middleman at a discount of 40% and since the middleman must, economically, make a profit on the sale to him, that the discount to the chain stores and mail order houses is discriminatory.

The statute, under which the complaint is filed, is set out in the footnote.³ The case against Lionel, the manufacturer, is largely founded on Section 13(a) and as against the other defendants on Section 13(f).

I am of the opinion that under Section 13(a) of the Robinson-Patman Act, as consolidated into Title 15 U.S.C.A., it is requisite in order to show any actionable unlawful conduct in a discrimination in price that there must be two purchases from the party charged with such discrimination and that such discrimination involve two purchasers. This is (a) shown by the language of the Act; (b) it is buttressed by the clear legislative history of the Act, and (c) it is so construed by the courts. The Act states that "It shall be unlawful for any person engaged in commerce * * * to discriminate in price between different purchasers of commodities of like grade and quality * * *." This clearly indicates two purchases from the same seller and is accentuated by Section (e) where the prohibited discrimination is spoken of as "in favor of one purchaser against another purchaser".

The legislative history of the Robinson-Patman amendment with equal clarity indicates that the purpose of the Act was to "suppress more effectively discriminations between customers of the same seller." This is the exact language of the Senate Committee on the Judiciary Report No. 1502, 74th Congress, 2nd Session, January 16, 1936. The various items of legislative history as set out in the footnote⁴ will not be discussed in detail. There can be no doubt of the intention of the Act and that such intention is that when a vendor has two or more purchasers he shall exercise no discrimination between them.

The cases have uniformly held that the Act contemplated two purchasers. Shaw's, Inc., v. Wilson-Jones Co., 3 Cir., 105 F.2d 331. In A. J. Goodman & Son, Inc., v. United Lacquer Mfg. Corporation, D.C., 81 F.Supp. 890, 892, it is said: "There must be actual sales at two different prices to two different actual buyers."⁵

It is conceded that the plaintiff, Klein, is not actually a purchaser from Lionel, the manufacturer and defendant, and never has been such purchaser. The plaintiff, in order to show that he comes within the designation of "purchaser", seizes upon the words "or with customers of either of them" as found in the statute. I think the use of this language for the given purpose is inappropriate. The Act prohibits discrimination in price between two purchasers from the seller. This discrimination, however, by the Act is made actionable when the effect of it is to lessen competition with any person who grants or knowingly receives the benefit of such discrimination or "with customers of either of them". The language clearly is not meant to define "purchaser" but to indicate the conditions under which a discrimination is actionable, viz., when the effect of any discrimination is an injury to competition "with any person who either grants or knowingly receives the benefit of such discrimination, or with customers of either of them * * *."

The plaintiff, however, cites cases in which, as he contends, a retailer purchasing from a jobber has been recognized as a "purchaser" from the manufacturer. These cases are collected in the footnote.⁶

These cases represent proceedings before the Federal Trade Commission acting under 15 U.S.C.A. § 21 and looking toward a "cease and desist order" of that Commission. In the cited cases where the manufacturer dealt with a jobber, and a retailer from such jobber was held to have had some relationship to the manufacturer, it appeared that the manufacturer had either a direct actual relationship with the retailer or that it exercised a control over the relations between the jobber and the retailer. No such situation exists here. No direct dealings have been alleged or shown between Lionel and the plaintiff nor any measure of control by Lionel over the dealings of any jobber.

The defendants contend that since it is clear that the plaintiff is not and never has been one of two necessary purchasers from Lionel that therefore no cause of action rests with him. They contend, in effect, that no cause of action rests with the plaintiff in the absence of a vendor-vendee relationship with Lionel, charged with the discriminations.

The Robinson-Patman Act⁷ by Section 2, with its parenthetical subsections, is expressly amendatory of the Clayton Act and becomes a part of such Act and a part of the, so-called, antitrust laws. Section 4 of the Clayton Act, 15 U.S.C.A. § 15, provides:

"Any person who shall be injured in his business or property by reason of anything forbidden in the anti-trust laws may sue therefor * * * without respect to the amount in controversy, and shall recover three-fold the damages by him sustained, and the cost of suit, including a reasonable

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