Lippa's, Inc. v. Lenox, Incorporated

• Decision Date: 30 September 1969
• Docket Number: Civ. A. No. 5346.
• Citation: 305 F. Supp. 182
• Parties: LIPPA'S, INC. v. LENOX, INCORPORATED.
• Court: U.S. District Court — District of Vermont

305 F. Supp. 182

LIPPA'S, INC. v. LENOX, INCORPORATED.

Civ. A. No. 5346.

United States District Court D. Vermont.

September 30, 1969.

R. Allan Paul, Paul, Frank & Collins, Burlington, Vt., for plaintiff.

Guy M. Page, Yandell & Page, Burlington, Vt., and Andrew C. Hartzell, Jr., Debevoise, Plimpton, Lyons & Gates, New York City, for defendant.

OPINION

LEDDY, District Judge.

This is a private antitrust action brought by Lippa's, Inc., a Vermont retail jewelry and gift dealer, against Lenox, Inc., a manufacturer and distributor of china dinnerware. The action was instituted on September 13, 1968, and service was made on the Vermont Secretary of State in accordance with 12 V.S.A. §§ 855, 856 (Supp.1969). On October 7, 1968, defendant filed a motion to dismiss on the grounds that service was improper and the statute of limitations had run. Before an opinion was rendered on this motion, plaintiff served the complaint again by sending it to the United States Marshal in New Jersey for service on defendant's general counsel in accordance with Section 12 of the Clayton Act, 15 U.S.C. § 22 (1964).

Defendant renewed its motion on the ground that venue was improper in this district. An affidavit of defendant's general counsel was submitted in support of the motion in this and a companion case, Lippa & Co., Inc. v. Lenox, Inc., 305 F.Supp. 175. Plaintiff was allowed to submit interrogatories to the defendant on the limited question of whether there was venue over the defendant in this district.

The question of whether under the provisions of Section 12 of the Clayton Act, there is venue in this district has been decided in an opinion in a companion case. See Lippa & Co., Inc. v. Lenox, Inc., 305 F.Supp. 175 (D.Vt. 1969). Since the facts and the issue in this case are identical to those in the companion case, it is clear that on the basis of that opinion venue lies over the defendant in this case.

This leaves only the question of the statute of limitations. The statute of limitations applicable to antitrust actions is set out in Section 4B of the Clayton Act, 15 U.S.C. § 15b (1964):

Any action to enforce any cause of action under sections 15 or 15a providing for private treble damage actions of this title shall be forever barred unless commenced within four years after the cause of action accrued. * * *

The parties in this case are in agreement that the cause of action, if any, accrued on January 2, 1964. The suit was instituted on September 13, 1968. Therefore, the action was commenced over four years after the cause of action accrued and, absent other provisions, would be barred by Section 4B of the Clayton Act.

Plaintiff seeks to avoid this result by invoking Section 5(b) of the Clayton Act, 15 U.S.C. § 16(b) (1964):

Whenever any civil or criminal proceeding is instituted by the United States to prevent, restrain, or punish violations of any of the antitrust laws * * * the running of the statute of limitations in respect of every private right of action arising under said laws and based in whole or in part on any matter complained of in said proceeding shall be suspended during the pendency thereof and for one year thereafter * * *.

Although the question of whether section 5(b) applies in this case is essentially legal, it is necessary to explore some additional facts which plaintiff references in invoking section 5(b).

The plaintiff alleges in its complaint that prior to January 2, 1964, the plaintiff purchased the defendant's china dinnerware as an authorized retail dealer. During the period plaintiff was a dealer, defendant issued price lists and advertising material in which the resale prices of its products were set out. Defendant made it known to its retailers that if it did not retail defendant's china at the price set forth in the lists and advertising materials, they would no longer be allowed to buy defendant's china. Defendant also made it known that it prohibited transshipping—that is, sales by retailers to other dealers who had not been authorized to sell defendant's products—and would terminate retailers who engaged in transshipping. Defendant policed its restrictions on resales by various means, including subscribing to a "clipping" service which provided information on resale prices.

On January 2, 1964, plaintiff was terminated for transshipping. Defendant has refused to deal with plaintiff since although plaintiff has been ready to receive more china.

On October 13, 1966, the Federal Trade Commission issued a complaint against Lenox, alleging a violation of Section 5(a) (1) of the Federal Trade Commission Act, 15 U.S.C. § 45(a) (1) (1964). The complaint charged the defendant with establishing resale prices and requiring dealers to adhere to these prices. It charged the defendant with issuing price lists and entering agreements with retailers to sell at these prices. It also charges defendant with employing various means of policing and terminating retailers who are found to be selling below the set resale price.

A hearing was held on this complaint on November 16, 1966, before an FTC hearing examiner. On May 29, 1967, a cease and desist order was issued against the defendant. This order went into detail as to the specific acts in the resale price maintenance scheme that it covered. It did not mention "transshipping."

The examiner's decision was appealed to the full commission and, on April 9, 1968, the commission handed down an opinion affirming the examiner. They added, however, that the defendant must also cease his prohibition of "transshipping" since transshipping is an integral part of defendant's resale price maintenance policy. This decision is presently on appeal in the Second Circuit.

Plaintiff has argued that the Federal Trade Commission proceeding against the defendant meets the requirements of Section 5(b) of the Clayton Act and, therefore, that the statute of limitations for this antitrust action is tolled during the pendency of the FTC action. Its argument breaks down into two separate contentions: (1) the proceeding brought by the FTC against Lenox is a "civil or criminal proceeding * * * instituted by the United States to prevent, restrain or punish violations of any of the antitrust laws * * *;" (2) this action is based in whole or in part on any matter complained of in the FTC proceeding. For purposes of analysis, these contentions will be treated separately.

The question of whether an FTC proceeding may meet the requirements of Section 5(b) of the Clayton Act came before the Supreme Court in Minnesota Mining & Mfg. Co. v. New Jersey Wood Finishing Co., 381 U.S. 311, 85 S.Ct. 1473, 14 L.Ed.2d 405 (1965).¹ In that case, the plaintiff had brought a private treble damage action alleging that the defendant's acquisition of all of the assets of an electrical installation company violated Section 7 of the Clayton Act and Sections 1 and 2 of the Sherman Act. Defendant made a motion to dismiss based upon the statute of limitations. Plaintiff resisted this motion on the ground that the Federal Trade Commission had brought a related proceeding against the defendant under Section 7 of the Clayton Act and that a year had not expired since the completion of that proceeding.

The Supreme Court decided that the FTC proceeding tolled the statute of limitations in the private action. It found, essentially, that the statutory wording of Section 5(b) of the Clayton Act was ambiguous. Although the precise language of § 5(b) was found not to clearly encompass FTC proceedings, it did not exclude them. Thus, the Court decided that the statutory wording provided little guidance and turned to policy considerations.

The Court noted that Congress throughout the creation of § 5 clearly expressed a desire to permit private parties the benefits of related government actions.² According to the Court, this policy would be seriously undermined if tolling effect were not given to FTC proceedings since these proceedings make up a major segment of the Government's antitrust enforcement efforts. Moreover, these proceedings were found to reap just as much benefit for the private litigant as actual court suits brought by the United States Department of Justice.

Although the Minnesota Mining opinion did not dissect the wording of § 5(b), it is clear that the Court found that an FTC administrative proceeding is a "civil * * * proceeding" as those words are used in § 5(b) and that such a proceeding is brought by the "United States" as the term is used in § 5(b).³ While these determinations narrow the issues in this case, they do not decide it. The additional wording in § 5(b) creates another interpretative hurdle not present in Minnesota Mining. Specifically, I refer to the words "to prevent, restrain or punish violations of any of the antitrust laws."

The Clayton Act contains its own definition of the "antitrust laws." See 15 U.S.C. § 12 (1964). The definition includes the Sherman Antitrust Act, the Clayton Act and the Wilson Tariff Act. The FTC proceeding in Minnesota Mining was brought pursuant to Section 11 of the Clayton Act, 15 U.S.C. § 21 (1964), to enforce Section 7 of the Clayton Act, 15 U.S.C. § 18 (1964). Since the Clayton Act is an "antitrust law," the Minnesota Mining proceeding was clearly brought to "prevent, restrain, or punish violations of any of the antitrust laws."

The FTC proceeding in this case did not involve the Clayton Act, but instead was brought pursuant to Section 5(a) (1) of the Federal Trade Commission Act (FTCA), 15 U.S.C. § 45(a) (1) (1964). The FTCA is not contained in the list in the definition of the term, antitrust law, in the Clayton Act. In Nashville Milk Co. v. Carnation Co., 355 U.S. 373, 78 S.Ct. 352, 2 L.Ed.2d 340 (1958), the Supreme Court held that the list is exclusive. Therefore, the FTCA is not an antitrust law for purposes of the Clayton Act and, specifically, as that term is used in § 5(b).

Two reported decisions have treated the exact issue present...