Michael Halebian NJ, Inc. v. Roppe Rubber Corp.

• Decision Date: 12 June 1989
• Docket Number: Civ. A. No. 87-3919 (HAA).
• Parties: MICHAEL HALEBIAN N.J., INC., Plaintiff, v. ROPPE RUBBER CORPORATION, et al., Defendants.
• Court: U.S. District Court — District of New Jersey

718 F. Supp. 348

MICHAEL HALEBIAN N.J., INC., Plaintiff, v. ROPPE RUBBER CORPORATION, et al., Defendants.

Civ. A. No. 87-3919 (HAA).

United States District Court, D. New Jersey.

June 12, 1989.

Douglas S. Eakeley, Riker, Danzig, Scherer & Hyland, Morristown, N.J., for Michael Halebian N.J., Inc.

Philip White, Lee Adlerstein, Sills, Cummis, Zuckerman, Radin, Tischman, Epstein & Gross, Newark, N.J., for J. Bernardo Distributors, Inc.

Ann G. McCormick, Crummy, Del Deo, Dolan, Griffinger & Vecchione, Newark, N.J., Jonathan E. Thackeray, Baker & Hostetler, Cleveland, Ohio, for Roppe Rubber Corp.

Marc Pergament, Levin, Weinberg, Raley & Pergament, P.C., Garden City, N.Y., for Salesmaster Associates, Inc.

HAROLD A. ACKERMAN, District Judge.

THE COURT: On November 29, 1988, plaintiff Michael Halebian, N.J. Inc., filed its amended complaint against defendants Roppe Rubber Corp., Salesmaster, Inc., J. Bernardo Distributors, Inc. and Allstate Rubber Company, Inc., in which it alleged that the defendants, either singly or collectively, violated the state and federal antitrust laws, engaged in unfair competition and breach of contract, tortiously interfered with plaintiff's prospective economic advantage and induced the breach of contract. On February 22, 1989, plaintiff consented to dismiss its claims against Allstate. On February 3rd and 27th and March 3, 1989, defendants Roppe, Salesmaster and Bernardo filed their respective motions for summary judgment.

Summary judgment may be granted if, drawing all inferences in favor of the nonmovant, the pleadings, affidavits and admissions on file demonstrate that there is no genuine issue of material fact and the movant is entitled to judgment as a matter of law. Chipollini v. Spencer Gifts, 814 F.2d 893, 896 (3rd Cir.), cert. dism'd, 483 U.S. 1052, 108 S.Ct. 26, 97 L.Ed.2d 815 (1987). Put differently, "summary judgment may be granted if the movant shows that there exists no genuine issues of material fact that would permit a reasonable jury to find for the nonmoving party." See Miller v. Indiana Hospital, 843 F.2d 139, 143 (3d Cir.), cert. denied, ___ U.S. ___, 109 S.Ct. 178, 102 L.Ed.2d 147 (1988). An issue is "genuine" if a reasonable jury could possibly hold in the nonmovant's favor with regard to that issue. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247-48, 106 S.Ct. 2505, 2509-10, 91 L.Ed.2d 202 (1986); United States v. 225 Cartons, et al., 871 F.2d 409, 419 (3d Cir. 1989). A fact is material if it influences the outcome of the legal issue under the governing substantive law. See Anderson, cited supra, 477 U.S. at 248, 106 S.Ct. at 2510. Hence, a material fact, as the Supreme Court in Anderson pointed out, is identified by reference to the substantive law. Id.

The moving party bears the initial burden of identifying admissible evidence that demonstrates the absence of a genuine issue of material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 323-24, 106 S.Ct. 2548, 2552-53, 91 L.Ed.2d 265 (1986). Once that burden has been met, the nonmoving party must come forward with evidence, while not necessarily presented in an admissible form, which shows that there is a genuine issue for trial, or it will be defeated on the motion. Matsushita Electric Industrial Co. v. Zenith Radio Corp., 475 U.S. 574, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986); Federal Rule of Civil Procedure 56(e).

Since this matter is before me on motions of defendants for summary judgment, I shall view the factual record before the Court in a light most favorable to the nonmoving plaintiff. See T.J. Trauner Associates v. Cooper Benton, et al., 820 F.2d 643 (3d Cir.1987).

Viewing the facts in this way, the record before the Court reveals that plaintiff, Michael Halebian N.J. ("Halebian") is a New Jersey based distributor of, inter alia, flooring products manufactured by companies such as Mercer Plastics and Johnson Rubber. See plaintiff's response to Allstate's Interrogatory No. 23 and Salesmaster's Interrogatory No. 2. It is a major distributor of such products and the largest in New Jersey. In all but one instance plaintiff purchased its stock from manufacturers rather than distributors, and sells its merchandise on a nonretail basis. See Mr. Halebian's deposition at Page 639; plaintiff's response to Salesmaster's Interrogatory No. 9(b).

Defendant Roppe Rubber Company ("Roppe"), an Ohio based company, which has manufacturing facilities in Ohio and Florida and produces, among other products, rubber cove base. See the deposition of Frederick Jacobs at Page 8. Cove base is the molding attached at the intersection of a wall and the floor in the interior of a building. At least twelve other companies manufacture this product. See plaintiff's response to both Salesmaster's Interrogatory No. 9 and Allstate's Interrogatory No. 12.

Roppe sells its product through a system of independent authorized distributors whose clients are generally architects, contractors and builders. See Mr. Jacobs' affidavit at Paragraphs 1-4. Prior to 1984, Roppe's only distributor in the New York-New Jersey Metropolitan Area was Allstate, which is located in Ozone Park, New York. In 1984, Roppe granted a distributorship to Salesmaster, located in Westbury, Long Island. See the affidavit of Steven Kurtz, dated February 24, 1989, Paragraphs 1, 4-5. Roppe considers these two distributors as assigned to the New York-New Jersey Metropolitan Area. Mr. Halebian describes these entities as being among the principle distributors of floor products and that Salesmaster and Halebian are among the largest. See Mr. Halebian's deposition at 117-20, 123-24.

Of interest here as well is a third distributor of Roppe products, J. Bernardo Distributors, Inc., which is located in Pittstown, Pennsylvania, and has served customers primarily located in the Allentown/Easton/Phillipsburg area since 1986. See Mr. Joseph Bernardo's deposition at 30-34.

While the distributors state that they were never assigned a territory or told to restrict their sales to a particular geographical area, see deposition of Mr. Kurtz at 114; Mr. Jacobs at 67; Mr. Bernardo at 43-44; Mr. Gilbert Szabo at 63, 69, Roppe apparently envisioned that its distributors would sell its products to the areas which they could most effectively service. See Jacobs' affidavit at Paragraph 2; Roppe's response to Plaintiff's Interrogatories No. 1, 6. The record reflects that Roppe distributors were expected to carry the full line of products, make certain presentations to promote the product, provide samples and install and maintain the base and resolve warranty claims and complaints. In light of these performance requirements, Roppe believed that its distributors had "more or less defined trading territory." See deposition of Gilbert Szabo at 81-82.

Roppe frowns upon sales by unauthorized distributors since they are not trained in the installation and maintenance of the product and secure sales by virtue of the services that authorized distributors provide. By "free-riding" on the efforts of authorized dealers, unauthorized distributors deprive authorized distributors of sales they might otherwise obtain.

A central issue in this case is whether or not Roppe had a uniform policy against sales by authorized distributors to unauthorized distributors or Roppe products for distribution in other geographical areas. This type of selling is known as transhipping. When such sales occur, Roppe contends that the unauthorized distributor, or bootlegger, acquires cove base in one territory for distribution in another and reaps the benefits from the sales and promotional efforts of authorized distributors in that second territory. See Jacobs' affidavit at Paragraphs 3-4.

According to Steven Kurtz, who is the president of Salesmaster:

"I understood that distributors like Salesmaster are not to sell to ... distributors who sell or acquire a product through unauthorized channels for distribution in areas already secured by authorized dealers."

Kurtz affidavit at Paragraph 6. As stated previously, Kurtz acknowledged, however, that he was never formally assigned a territory. See his deposition at Page 114.

Apparently, Mr. Jacobs, vice president of Roppe, contends that Roppe had a policy that prohibits distributors from selling Roppe products to unauthorized subdistributors. See his affidavit at Paragraph 2. See also his deposition at 36-38, in which he stated that in 1984, Roppe had a policy pursuant to which "sales were not to be made to unauthorized distributors outside his territory," and that authorized distributors were to "concentrate their sales efforts within their primary area of responsibility," and were to inform Roppe of subdistributor-arrangements established in a distributor's territory. See Mr. Jacobs' deposition at 38. As noted above, however, the representatives of various distributors state that they were never formally apprised of such policies but rather assumed that there were limitations with respect to the territory they were to or had the ability to service.

On various occasions since 1983, plaintiff has asked to become a Roppe distributor. See plaintiff's response to both Allstate Interrogatory Nos. 11, 24, 27 and 28, and Salesmaster's Interrogatories Nos. 21, 25, as well as Mr. Halebian's deposition at Page 636. According to Michael Halebian, such a distributorship is important because his company has been otherwise unable to provide its customers with Roppe cove base, "the base of choice," because of its quality and price, and as a result those customers must purchase the products from Salesmaster and/or Allstate, thereby giving those entities access to customers who would not otherwise purchase any products from them. See plaintiff's response to Roppe Interrogatory No. 14; Mr. Halebian's certification, dated April 10, 1989, at Paragraphs 4-5; Mr. Szabo's deposition at 31-38; plaintiff's response to Allstate's Interrogatories Nos. 13, 14, 20 and 28; deposition of Mr....