Lee-Wilson, Inc. v. General Electric Company

• Decision Date: 19 May 1955
• Docket Number: No. 4944.,4944.
• Citation: 222 F.2d 850
• Parties: LEE-WILSON, Inc., Defendant, Appellant, v. GENERAL ELECTRIC COMPANY, Plaintiff, Appellee.
• Court: U.S. Court of Appeals — First Circuit

222 F.2d 850 (1955)

LEE-WILSON, Inc., Defendant, Appellant, v. GENERAL ELECTRIC COMPANY, Plaintiff, Appellee.

No. 4944.

United States Court of Appeals First Circuit.

May 19, 1955.

Irving Karg, Boston, with whom Fox, Orlov & Cowin, Boston, was on brief, for appellant.

Warren F. Farr, Boston, with whom George C. Caner, Jr., and Ropes, Gray, Best, Coolidge & Rugg, Boston, were on brief, for appellee.

Before MAGRUDER, Chief Judge, and WOODBURY and HARTIGAN, Circuit Judges.

MAGRUDER, Chief Judge.

The appeal here is from an order by the district court granting an application for a preliminary injunction enjoining Lee-Wilson, Inc., from selling at retail electrical appliances bearing the name and trade-mark of General Electric Company at less than the minimum "fair trade" prices established by General Electric Company pursuant to the Massachusetts Fair Trade Law. Mass. G.L. (Ter.Ed.) Ch. 93, §§ 14A-14D, as added by St.1937, c. 398, as amended.

General Electric Company, a New York corporation, filed its complaint under the local statute against appellant, a Massachusetts corporation, alleging that the plaintiff had entered into numerous fair trade agreements with retail dealers in Massachusetts, pursuant to the Fair Trade Law, under which it stipulated minimum resale prices at retail for electrical appliances manufactured by it and bearing its trade-mark; that the defendant was notified of these agreements and of the fair trade prices stipulated thereunder; that, despite such notice, and in violation of the local statute, the defendant had sold and was continuing to sell electrical appliances manufactured by the plaintiff at prices lower than such fair trade prices. The jurisdiction of the district court was invoked on the basis of diversity of citizenship and an amount in controversy in excess of $3,000.00. 28 U.S.C. § 1332.

Since the issuance of the preliminary injunction now appealed from was preceded by an order of the district court denying a motion to dismiss filed by the defendant, the correctness of this ruling is presently before us for review. The motion to dismiss was "on the ground that the matter in controversy exclusive of interest and costs does not exceed the amount of Three Thousand ($3,000.00) Dollars."

The local statute purports to confer upon manufacturers a right to enforce a policy of retail price maintenance under defined circumstances. Hence the amount in controversy is the value of this asserted right against the defendant for which plaintiff sought protection by injunction. See Gibbs v. Buck, 1939, 307 U.S. 66, 74-75, 59 S.Ct. 725, 83 L.Ed. 1111; Brotherhood of Locomotive Firemen & Enginemen v. Pinkston, 1934, 293 U.S. 96, 55 S.Ct. 1, 79 L.Ed. 219; Berryman v. Board of Trustees of Whitman College, 1912, 222 U.S. 334, 32 S.Ct. 147, 56 L.Ed. 225.

Appellee's complaint, which was verified as a matter of personal knowledge by affidavit executed by the manager of the Fair Trade Section of General Electric Company, contained the formal allegation that the matter in controversy exceeded, exclusive of interest and costs, the amount of $3,000.00. So far as the sufficiency of the complaint is concerned, this formal allegation was enough unless it appeared "to a legal certainty from the rest of the complaint that the claim is really for less than the jurisdictional amount." Food Fair Stores, Inc. v. Food Fair, Inc., 1 Cir., 1949, 177 F.2d 177, 182; Gibbs v. Buck, 1939, 307 U.S. 66, 72, 59 S.Ct. 725, 83 L.Ed. 1111. There is nothing in the complaint which negates the formal allegation of the existence of the required jurisdictional amount.

But our inquiry does not stop at this point where, as here, the defendant in an appropriate way challenged the allegation of the jurisdictional amount. At the hearing on the motion, the defendant did not offer to the district court any evidence bearing on the jurisdictional amount, but argued on a priori grounds, we gather, that sales below fair trade prices can never be damaging to a manufacturer. Defendant's motion "did not operate merely as a demurrer, for it did not assume the truth of the bill's averments and assert that in spite of their truth the complaint failed to state a case within the court's jurisdiction." KVOS, Inc., v. Associated Press, 1936, 299 U.S. 269, 278, 57 S.Ct. 197, 201, 81 L.Ed. 183. This is not changed by the defendant's failure to introduce evidence, because at this point the plaintiff had the burden of proof in support of its jurisdictional allegations. McNutt v. General Motors Acceptance Corp., 1936, 298 U.S. 178, 189, 56 S.Ct. 780, 80 L.Ed. 1135.

The complaint, in addition to the formal averment of jurisdictional amount, further alleged that the plaintiff had expended large sums of money in promoting and advertising said electrical appliances and had established a valuable reputation and good will for the same and for the trade-mark under which they are produced and sold; that said trade-mark had a value in excess of $3,000.00; that the unlawful acts of the defendant, past and threatened, "have caused and threaten to continue to cause irreparable damage to plaintiff and tend to impair and destroy plaintiff's valuable good will and the value of plaintiff's trade-mark. As a result of the said unlawful acts, other retailers in competition with defendant are placed at a competitive disadvantage and therefore purchase fewer of said appliances for resale, promotion of said appliances through cooperative advertising is adversely affected, the threat of a price war exists, and the plaintiff's trade-mark under which said appliances are sold is brought into disrepute with both dealers and the general public." These allegations were sworn to be true to the personal knowledge of an executive of the plaintiff. Certainly a court would not be justified in taking judicial notice that such sworn allegations of damage could not be true. The affidavit then is competent proof that the plaintiff had already suffered damage and would continue to suffer damage through defendant's acts...