Lieberthal v. North Country Lanes, Inc.

• Citation: 332 F.2d 269
• Decision Date: 15 May 1964
• Docket Number: Docket 28652.,No. 359,359
• Parties: Jerome LIEBERTHAL, Plaintiff-Appellant, v. NORTH COUNTRY LANES, INC., Sports Arenas, Inc. and Robert Sidel, Defendants-Appellees, Jack E. Gellman, Bowlers Management, Inc., Plattsburgh Lanes, Inc. and Consolidated Bowling Corp., Defendants.
• Court: United States Courts of Appeals. United States Court of Appeals (2nd Circuit)

332 F.2d 269 (1964)

Jerome LIEBERTHAL, Plaintiff-Appellant, v. NORTH COUNTRY LANES, INC., Sports Arenas, Inc. and Robert Sidel, Defendants-Appellees, Jack E. Gellman, Bowlers Management, Inc., Plattsburgh Lanes, Inc. and Consolidated Bowling Corp., Defendants.

No. 359, Docket 28652.

United States Court of Appeals Second Circuit.

Argued March 16, 1964.

Decided May 15, 1964.

Seymour S. Epstein of Sulzberger & Sulzberger, New York City, for plaintiff-appellant.

Martin L. Fried, of Tenzer, Greenblatt, Fallon & Kaplan, New York City (Bernard

H. Goldstein, New York City, on the brief), for defendants-appellees.

Before FRIENDLY, HAYS and MARSHALL, Circuit Judges.

HAYS, Circuit Judge.

Lieberthal appeals from a judgment of the District Court dismissing his amended complaint, which sought treble damages under the Sherman Anti-Trust Act, 15 U.S.C. §§ 1, 2, 15 (1958). The District Court held that the amended complaint failed to state a claim upon which relief could be granted, Fed.R.Civ.P. 12 (b) (6), because (1) the averments of the complaint were insufficient to show any restraint of interstate, as opposed to intrastate, commerce, and (2) Lieberthal was not an aggrieved party having standing to maintain a private antitrust action. As we hold that the complaint does not sufficiently allege a restraint of interstate commerce, we express no opinion regarding the second ground advanced by the District Court as a basis for its decision.

Defendants North Country Lanes, Inc., Sports Arenas, Inc. and Robert Sidel are, respectively, the local operating subsidiary, the national management corporation, and a principal officer of a national bowling alley chain Sports Arenas group. Defendants Plattsburgh Lanes, Inc., Bowlers Management, Inc., Consolidated Bowling Corp., and Jack E. Gellman are corresponding links in a competing chain Consolidated Bowling group. The amended complaint alleges that prior to March, 1959, the Sports Arenas group entered into a written agreement with Lieberthal for a twenty-one year lease of a site and a building, which Lieberthal agreed to construct, to house their bowling alleys in Plattsburgh, New York. On March 30, 1959, North Country Lanes, Inc. served on Lieberthal a notice of termination of the lease, which gave as the reason for the termination Lieberthal's failure to complete the required building by March 1, 1959. The notice of termination is alleged to have been given pursuant to a conspiracy among all of the defendants that North Country Lanes, Inc. would terminate its lease and the Consolidated Bowling group would indemnify North Country Lanes, Inc. for any loss, up to fifty thousand dollars, that it might sustain as a result. The object of this conspiracy was alleged to be to prevent the opening of a bowling alley which would compete with the alley operated by Plattsburgh Lanes, Inc. Lieberthal claims that this conspiracy violates the Sherman Anti-Trust Act.

To establish a violation of either Section 1 or Section 2 of the Sherman Anti-Trust Act Lieberthal was required to allege facts showing that the conspiracy had an impact on interstate commerce either because the acts complained of occurred in interstate commerce or because those acts, though occurring wholly on the local level, substantially affected interstate commerce. See Las Vegas Merchant Plumbers Ass'n v. United States, 210 F.2d 732, 739, n. 3 (9th Cir.), cert. denied, 348 U.S. 817, 75 S.Ct. 29, 99 L.Ed. 645 (1954).

The amended complaint alleges that the Plattsburgh area draws bowling alley trade from Vermont and Canada and contains additional averments, as summarized by the district judge, that:

"a. the building leased by plaintiff to North Country had been erected, the equipment had not yet been installed, and the lease included a percentage of the returns to be received from the bowling business and from the sale of items of merchandise (presumably food and beverages principally);

"b. bowling alleys in Vermont and Canada compete with those in the Plattsburgh area;

"c. North Country actively solicited the patronage of bowling leagues in Vermont and Canada;

"d. North Country advertised in Canadian and Vermont newspapers, soliciting customers in Canada and Vermont to come to Plattsburgh to bowl and `used radio and television media\' (it is not stated where) also to solicit such customers "e. North Country and the other defendant operators of bowling alleys brought, or intended to bring, into Plattsburgh bowling alley equipment which moved in (or would move) in interstate commerce from outside New York;

"f. the equipment `scheduled to be brought into Plattsburgh\' in interstate commerce was substantial and included `kitchen and service equipment\';

"g. the `equipment, supplies and appurtenances being brought to Plattsburgh were items of interstate commerce for delivery to the ultimate consumer\' (which seems strange, considering the nature of a bowling business);

"h. the equipment for the 32 alleys in the building of plaintiff, which was to be in interstate commerce, did not arrive;

"i. the merchandise to be sold by North Country in the premises, which was to be in interstate commerce, did not arrive;

"j. competition with bowling alleys in Canada and Vermont was lessened;

"k. the flow of bowling alley equipment in interstate commerce was restrained; and

"l. defendants acted `for the express purpose\' of stopping the interstate flow of `bowling alley equipment and material\' into Plattsburgh." 221 F.Supp. at 686-87.

The District Judge held that, even assuming the truth of these allegations, as he was required to do in passing on the motion to dismiss, the plaintiff did not sufficiently allege a restraint of interstate commerce. We agree.

The operation of bowling alleys, without more, must be held to be a wholly intrastate activity.

A business of which the ultimate object is the operation of intrastate activities, such as local sporting or theatrical exhibits, may make such a substantial utilization of the channels of interstate trade and commerce that the business itself assumes an interstate character. United States v. International Boxing Club, 348 U.S. 236, 241, 75 S.Ct. 259, 99 L.Ed. 290 (1955) (25% of income derived from interstate operations); United States v. Shubert, 348 U.S. 222, 225, 75 S.Ct. 277, 99 L.Ed. 279 (1955) (continuous interstate transportation of personnel, property, communications, and payments); cf. Aeolian v. Fischer, 40 F.2d 189 (2d Cir. 1930) (organ installation an integral part of interstate contract of sale). It has frequently been held, however, that the incidental flow of supplies in interstate commerce, Page v. Work, 290 F.2d 323, 332 (9th Cir.). cert, denied, 368 U.S. 875, 82 S.Ct. 121, 7 L.Ed.2d 76 (1961) (publishing legal notices); Elizabeth Hospital, Inc. v. Richardson, 269 F.2d 167, 170 (8th Cir.), cert. denied, 361 U.S. 884, 80 S.Ct. 155, 4 L.Ed.2d 120 (1959) (hospitals); Lawson v. Woodmere, Inc., 217 F.2d 148, 149 (4th Cir. 1954) (cemetery vaults), the interstate travel of customers of the local enterprise, United States v. Yellow Cab Co., 332 U.S. 218, 230-32, 67 S.Ct. 1560, 91 L.Ed. 2010 (1947) (taxicab service to and from railroad stations); Elizabeth Hospital, Inc. v. Richardson, supra at 170-71 of 269 F.2d, the solicitation of business in other states for the local enterprise, Page v. Work, supra at 329 of 290 F.2d, the utilization of interstate communications media, Martin v. National League Baseball Club, 174 F.2d 917 (2d Cir. 1949) (interstate broadcast of baseball games), or a...