Larry R. George Sales Co. v. Cool Attic Corp.

• Decision Date: 08 January 1979
• Docket Number: No. 78-1498,78-1498
• Citation: 587 F.2d 266
• Parties: 1979-1 Trade Cases 62,419 LARRY R. GEORGE SALES COMPANY, Plaintiff-Appellant, v. COOL ATTIC CORPORATION and Butler Ventamatic Corporation, Defendants-Appellees, Martin D. Siegel, Defendant.
• Court: U.S. Court of Appeals — Fifth Circuit

Page 266

587 F.2d 266

1979-1 Trade Cases 62,419

LARRY R. GEORGE SALES COMPANY, Plaintiff-Appellant, v. COOL ATTIC CORPORATION and Butler Ventamatic Corporation,

Defendants-Appellees,

Martin D. Siegel, Defendant.

No. 78-1498.

United States Court of Appeals, Fifth Circuit.

Jan. 8, 1979.

Patrick C. Guillot, Roger J. Allen, Dallas, Tex., for plaintiff-appellant.

Wynn, Brown, Mack, Renfro & Thompson, Theodore Mack, John S. Broude, Fort Worth, Tex., for defendants-appellees.

Appeal from the United States District Court for the Northern District of Texas.

Before JONES, AINSWORTH and HILL, Circuit Judges.

PER CURIAM:

We affirm the judgment appealed here on the basis of the District Court's Memorandum Opinion and Order which we adopt and attach as an Appendix.

AFFIRMED.

APPENDIX

NOTE: OPINION CONTAINS TABLE OR OTHER DATA THAT IS NOT VIEWABLE

TABLE

MEMORANDUM OPINION AND ORDER

Plaintiff, Larry R. George, d/b/a Larry R. George Sales Company (George) brings this action under the Robinson-Patman Act, 15 U.S.C. § 13(c), and the Sherman Act, 15 U.S.C. § 1, to redress injuries to his business allegedly incurred by virtue of actions of the Defendants, Cool Attic Corporation (Cool Attic) and Butler Ventamatic Corporation (Butler). Plaintiff seeks treble damages for the alleged antitrust violations and also, recovery for an alleged breach of contract or alternatively, recovery in Quantum meruit. Jurisdiction is alleged pursuant to 15 U.S.C. § 15 and 28 U.S.C. § 1332. The matter comes before the Court on Defendants' Motions to Dismiss for Want of Jurisdiction and for Failure to State a Claim upon Which Relief Can Be Granted. Defendants' motions are directed at Plaintiff's Fourth Amended Original Complaint. The issues raised herein have been thoroughly briefed and argued by counsel, and the matter is ripe for disposition.

Defendants, Cool Attic and Butler, are engaged in the manufacture and distribution of motorized attic fans in interstate commerce. The gist of Plaintiff's complaint involves the breach of an alleged manufacturer's representative agreement between Defendants and Plaintiff. Plaintiff contends that sometime in late October, 1973, Defendants orally contracted with Plaintiff to pay a commission of 4% On all sales of motorized attic fans by Defendants to S. S. Kresge Company in consideration of Plaintiff obtaining that account for Defendant Cool Attic. In reliance upon this oral contract, Plaintiff worked vigorously to obtain the Kresge account for either Butler or Cool Attic. Plaintiff asserts that as a result of his efforts, a representative of Defendants was enabled to meet with a buyer from Kresge and successfully negotiate the sale to Kresge of substantial quantities of Defendants' attic fans.

For cause of action Plaintiff further asserts that in the fall of 1973, he employed one David Brandt, the son of Al Brandt, the buyer for Kresge. Plaintiff alleges that thereafter the Brandts attempted to extort money from him by demanding that David Brandt be made a full and equal partner of Larry R. George Sales Company. The two Brandts, father and son, threatened to deprive Plaintiff of commissions due for sales to Kresge by Cool Attic and other accounts represented by George.

Plaintiff avers that when he refused to submit to such extortion, A. W. Brandt, David Brandt, and Cool Attic combined and conspired to divert all commissions on sales by Cool Attic to Kresge from Plaintiff George to David Brandt. Plaintiff alleges that this combination and conspiracy violated 15 U.S.C. § 1 because "it tended to restrain trade and prejudice the public interest by preventing the introduction of competing lines to K-Mart Stores, by preventing Larry George from representing former clients and by preventing Larry George from introducing competitive lines against those which were paying commissions to David Brandt . . ."

Plaintiff alleges performance on his part of all his obligations under the contract with Defendants Cool Attic and Butler, and asserts that the contract was breached by Defendants when sales commissions were paid to David Brandt on the sale of motorized attic fans by Defendant Cool Attic to Kresge. Plaintiff contends that the commission payments to David Brandt were made in violation of 15 U.S.C. § 13(c) because the same constituted payment of a commission or brokerage to an agent, representative, or intermediary who was acting on behalf of, or was subject to, the direct or indirect control of a party to the transaction other than Defendants Cool Attic or Butler. This other party is alleged to be A. W. Brandt, the buyer for Kresge, and Defendant alleges that A. W. Brandt and David Brandt split all commissions received by David Brandt for sales of Defendants' attic fans to Kresge. Plaintiff avers that the payments to David Brandt constituted commercial bribery inasmuch as Al Brandt informed Defendant Cool Attic that the commissions should and must be paid to David Brandt if sales to Kresge were to continue.

In addition to the asserted antitrust violations allegedly giving rise to liability on the part of Defendants, Plaintiff seeks recovery for breach of his manufacturer's representative agreement with Defendants. Alternatively, Plaintiff claims to have performed services on behalf of Defendants for which Plaintiff is entitled to compensation.

In assessing the allegations of Plaintiff George's Fourth Amended Complaint in light of Defendants' Motion to Dismiss, this Court is necessarily mindful of the teachings of the Supreme Court in Conley v. Gibson, 355 U.S. 41, 78 S.Ct. 99, 2 L.Ed.2d 80 (1957). Additional guidance from the 5th Circuit on the subject of dismissal on the pleadings is by no means lacking, a frequent formulation of the rule being that a motion to dismiss for failure to state a claim should not be granted unless it appears to a certainty that the Plaintiff would not be entitled to recover under any state of facts which could be proved in support of his claim. See Cook and Nichol, Inc. v. Plimsoll Club, 451 F.2d 505 (5th Cir. 1971); Webb v. Standard Oil, 414 F.2d 320 (5th Cir. 1969); and Pred v. Board of Public Instruction of Dade County, Florida, 415 F.2d 851 (5th Cir. 1969). With all deference to the rule recounted above, the Court is of the opinion that Plaintiff's Fourth Amended Complaint must be dismissed for want of jurisdiction and for failure to state a claim upon which relief may be granted.

PLAINTIFF'S ROBINSON-PATMAN ACT CLAIM

For cause of action under 15 U.S.C. § 13(c), Plaintiff alleges that payment by Defendant Cool Attic of commissions to David Brandt constituted payment of a commission or brokerage to an agent, representative, or intermediary acting on behalf of, or subject to, the direct or indirect control of a party to the transaction other than Defendant Cool Attic. George alleges that the payments to David Brandt constituted commercial bribery because Al Brandt informed Cool Attic that the commissions should and must be paid to David Brandt if sales to Kresge were to continue.

Defendants challenge Plaintiff's ability to maintain an action under 15 U.S.C. § 13(c), arguing that Plaintiff lacks standing to bring a treble damage suit under the Clayton and Robinson-Patman Acts because, within the context of a Robinson-Patman violation, Plaintiff is unable to allege competitive injury. In fact, considering the commercial relationship of the parties involved, Plaintiff is not a competitor of either Cool Attic or Kresge.

For purposes of this Motion to Dismiss, the Court must take as true the allegations of Plaintiff's Fourth Amended Complaint. The Court must therefore assume the truth of Plaintiff's allegations that illegal payments were made by Defendant Cool Attic to Al Brandt, buyer for S. S. Kresge. Nevertheless, Plaintiff George is not within the class of persons entitled to claim the protection of the antitrust laws in this case.

As a prerequisite to any recovery of treble damages, an antitrust Plaintiff must prove:

(1) A violation of the antitrust laws by Defendant;

(2) An injury to his business Resulting from the Defendants' wrongful actions; and

(3) Some indication of the amount of damage done.

Kestenbaum v. Falstaff Brewing Corporation, 514 F.2d 690, 694 (5th Cir. 1975); Terrell v. Household Goods Carriers Bureau, 494 F.2d 16, 20 (5th Cir. 1975).

The application of the second of the three listed requirements is explained in detail in Karseal v. Richfield Oil Corporation, 221 F.2d 358 (9th Cir. 1955). There, a California manufacturer of automobile polish brought suit alleging that Defendant Richfield executed, entered into, and operated various contracts in restraint of interstate trade in automotive accessories. Plaintiff Karseal alleged that as a direct and proximate result of Defendant's acts in violation of the antitrust laws, Plaintiff's salesmen were unable to sell Plaintiff's products to independent gasoline dealers operating under agreements with the Defendant.

In analyzing Karseal's claim under 15 U.S.C. § 15, the Ninth Circuit stated:

"The precise question presented is whether Karseal's business and wax product is 'within that area of the economy which is endangered by a break-down of competitive conditions in a particular industry.'

(Citing cases) Or, in other words, was Karseal within the 'target area' of Richfield's illegal practices . . . assuming Karseal was 'hit' by the effect of the Richfield antitrust violations, was Karseal 'aimed at' with enough precision to entitle it to maintain a treble damage suit under the Clayton Act." 221 F.2d at 362.

One who is only incidentally injured by a violation of the antitrust laws in the words of the Ninth Circuit, "the bystander who was hit but not aimed at" cannot recover against the violator. Recovery and damages under the antitrust law is available to those who have been directly injured by the lessening of competition and is withheld from those who seek the windfall of treble damages because of...