Logan Lanes, Inc. v. Brunswick Corporation

• Decision Date: 05 May 1967
• Docket Number: No. 21168.,21168.
• Citation: 378 F.2d 212
• Parties: LOGAN LANES, INC., an Idaho Corporation, Appellant, v. BRUNSWICK CORPORATION, a Delaware Corporation, Appellee.
• Court: U.S. Court of Appeals — Ninth Circuit

378 F.2d 212 (1967)

LOGAN LANES, INC., an Idaho Corporation, Appellant, v. BRUNSWICK CORPORATION, a Delaware Corporation, Appellee.

No. 21168.

United States Court of Appeals Ninth Circuit.

May 5, 1967.

COPYRIGHT MATERIAL OMITTED

L. Charles Johnson, Callis A. Caldwell, Johnson & Olson, Pocatello, Idaho, for appellant.

Louis F. Racine, Jr., Racine, Huntley & Olson, Pocatello, Idaho, Robert L. Stern, Miles G. Seeley, Ned Robertson, Martin, Wald, Mayer, Friedlich, Spiess, Tierney, Brown & Platt, Chicago, Ill., for appellee.

Before POPE, HAMLEY and BROWNING, Circuit Judges.

HAMLEY, Circuit Judge:

This is a suit brought by Logan Lanes, Inc. to recover treble damages in the sum of approximately $600,000 from Brunswick Corporation (Brunswick) for the alleged violation of section 2(a) of the Clayton Act, as amended by the Robinson-Patman Act (Act), 49 Stat. 1526 (1936), 15 U.S.C. § 13(a) (1964).¹ It arises from a sale of bowling lanes and related equipment by Brunswick to Utah State Building Board (Board), at lower prices than Brunswick charged plaintiff Logan Lanes, Inc., for similar equipment. The Board is an agency of the State of Utah. The district court granted summary judgment for Brunswick, and Logan Lanes appeals.

In its amended complaint, Logan Lanes made the following allegations of fact, among others: Brunswick is engaged in the manufacture and sale, in interstate commerce, of bowling lanes and equipment. Logan Lanes operates an establishment for bowling and billiards in Cache County, Utah. On October 5, 1959, Logan Lanes purchased from Brunswick sixteen bowling lanes and necessary related equipment, for a cash price of $13,091.00 per lane.

Logan Lanes further alleged that, in March and April, 1964, Brunswick sold ten bowling lanes and related equipment of like grade and quality to the Board in the same county and state for $8,111.86 per lane. The bowling lanes and equipment sold to the Board were used in competition with Logan Lanes. Since 1964, Brunswick has continued to sell bowling equipment to the Board at a discount at from 17½ to twenty-five percent under the prices Brunswick charges Logan Lanes for similar equipment.

As a result of the indicated discrimination in prices, Logan Lanes alleged, it has not been able to compete successfully with the operation using the bowling lanes sold to the Board, because Logan Lanes must charge a higher fee for using its lanes. Consequently, the company alleged, it has sustained a loss of at least $200,282.78 which, trebled, amounts to $600,848.34.

Brunswick moved to dismiss the action upon the ground that the amended complaint failed to state a claim upon which relief can be granted. In opposition to the motion to dismiss, Logan Lanes filed six affidavits, and in support of the motion Brunswick filed three affidavits and several exhibits.

A number of additional facts are to be gleaned from the affidavits and exhibits. The bowling equipment purchased by the Board was installed in the Student Union Building on the Utah State University campus at Logan, Utah. The bowling facilities were primarily for the use of students, faculty and staff of the University, but were also used by members of the public. One use the students make of such bowling equipment is to fulfill physical education requirements at the University. All income from the Student Union bowling alleys is used to finance student activity programs, or goes into a fund for expansion and improvement of the University.

Members of a University bowling league using the Student Union bowling alleys were charged the student rate, which is one dollar for three games, as compared to $1.35 for three games at Logan Lanes' bowling alley. The management of the Student Union lanes has declined to limit use of that equipment to persons associated with the University.

An affidavit submitted by Brunswick asserts that from July, 1964, when the new lanes were installed, to March 31, 1966, there were 128,349 lines bowled at the Student Union. Of these, according to this affidavit, 125,415 were bowled by students, faculty, staff and guests, while 2,934 were bowled by others. According to affidavits submitted by Logan Lanes, however, no effort was made at the Student Union lanes to determine whether prospective customers were associated with the University.

In view of these affidavits and other materials filed in connection with the motion to dismiss, none of which were excluded, the trial court properly regarded the motion as one for summary judgment for defendant Brunswick.² Ruling that there was no genuine issue as to any material fact, the court granted Brunswick's motion to dismiss on these alternative grounds: (1) Brunswick's sale of bowling lanes and equipment to the Board is exempt from the application of section 2 (a) of the Act, 49 Stat. 1526 (1936), 15 U.S.C. § 13(a) (1964),³ pertaining to price discrimination, because that section was not intended to apply to sales made to a state; and (2) the sale in question is exempt from the application of section 2(a), because the Board's purchase of this equipment was a purchase of supplies for its own use by a university not operated for profit, within the meaning of 52 Stat. 446 (1938), 15 U.S.C. § 13c (1964).⁴

Logan Lanes questions each of these grounds.

We consider first whether summary judgment for Brunswick was correctly granted on the latter ground, namely, that by reason of the 1938 statute exempting from the operation of the Act, certain purchases by universities and other non-profit institutions, these sales by Brunswick to the Board are exempt from the operation of section 2(a) of the Act.

Logan Lanes argues that since this statute refers to "purchases" of supplies, this might imply that Congress meant to limit the exemption to the purchasing party, and not extend it to the party selling the goods to a non-profit institution.

For every purchase, however, there must be both a purchaser and a seller. It follows that if a particular purchase is exempt from the Act, both the seller and purchaser involved in that transaction are exempt. Moreover, the benefits in the form of lower prices which are expected to accrue to non-profit institutions by reason of this statute would be illusory if only the purchasing institution, but not the sellers thereto, were exempted. No seller would be able to give a non-profit institution the benefit of a lower price which was discriminatory under the Act, if such seller was not exempt from the sanctions of the Act in making the sale.

Logan Lanes also contends that "supplies" as used in the 1938 statute, means only items of stock, materials and provisions needed to carry on daily operations, and does not include such capital items as bowling lanes.

The word "supplies," as used in this statute, is not defined. In general usage the term is sometimes meant to apply in a restricted sense. As an example, the term may be used to designate substances that are consumed with their use, and which do not enter into, and become a physical part of, a finished product.

As used in this statute, however, we think the term "supplies" is used in a more general sense. It embraces anything required to meet the institution's needs, whether it is consumed or otherwise disposed of, or whether it...