Orion's Belt, Inc. v. Kayser-Roth Corp.

• Decision Date: 28 June 1977
• Docket Number: No. IP 75-539-C.,IP 75-539-C.
• Citation: 433 F. Supp. 301
• Parties: ORION'S BELT, INC. v. KAYSER-ROTH CORP.
• Court: U.S. District Court — Southern District of Indiana

433 F. Supp. 301

ORION'S BELT, INC. v. KAYSER-ROTH CORP.

No. IP 75-539-C.

United States District Court, S. D. Indiana, Indianapolis Division.

June 28, 1977.

Dann, Pecar, Newman, Talesnick & Kleiman by Lawrence F. Dorocke, Indianapolis, Ind., for plaintiff.

Barnes, Hickam, Pantzer & Boyd, by Stephen K. Smith, Indianapolis, Ind., for defendant.

ORDER

STECKLER, Chief Judge.

This matter is before the Court on defendant's assertion in its Amended Answer of an affirmative defense and plaintiff's response in the form of a Motion to Strike Defendant's Fourth Affirmative Defense. The Fourth Defense states that the allegations of Count III of plaintiff's complaint fail to state a claim upon which relief can be granted and will be treated as a motion to dismiss Count III of plaintiff's complaint.

Plaintiff alleges that defendant caused national advertising which depicted a leather belt manufactured by plaintiff to be circulated to the retail men's wear trade, that the defendant thereafter manufactured and sold a poor quality imitation of plaintiff's product, and that defendant continues to circulate the advertising depicting plaintiff's product while selling the imitation.

Seeking damages and an injunction against the continued use of the advertising, plaintiff alleges that defendant engaged in unfair competition and also that defendant violated both 15 U.S.C. § 1125 and Ind.Code § 24-1-2-1 (Burns 1974). Count III sets out the alleged violation of Ind.Code § 24-1-2-1 (Burns 1974), and, pursuant to Ind.Code § 24-1-2-7 (Burns 1974), plaintiff seeks to recover a penalty of three-fold the damages sustained. Plaintiff also seeks attorneys' fees under Ind.Code § 21-1-2-7 (Burns 197-); the Court assumes that this was a typographical error and that plaintiff refers to Ind.Code § 24-1-2-7 (Burns 1974).

Section 24-1-2-1 reads, in part, as follows:

"Combinations to restrain trade or prevent competition — Act of 1907. — Every scheme, design, understanding, contract, combination in the form of a trust or otherwise, or conspiracy in restraint of trade or commerce, or to create or carry out restrictions in trade or commerce ... is hereby declared to be illegal ...."

Section 24-1-2-7 allows a private action for damages for anything declared unlawful under the Act XX-X-X-X-XX-X-X-XX, together with the costs of suit, including a reasonable attorney's fee.

Defendant asserts that plaintiff has alleged only unilateral acts by defendant and that unilateral acts do not constitute a prohibited scheme or design in restraint of trade under Section 24-1-2-1.

No Indiana case squarely addresses the issue of whether a scheme or design prohibited under Section 24-1-2-1 requires two or more participants. In Dye v. Carmichael Produce Co., 64 Ind.App. 653, 116 N.E. 425 (1917), the Court considered whether defendant's alleged conduct, apparently unilateral, fell within the prohibitions of a predecessor statute of Section 24-1-2-1 and Section 24-1-2-2. The Court concluded that the facts alleged failed to bring the case within the sections of the statute, but the Court did not explicitly state whether the unilateral character of the alleged acts took them out of the statute's prohibitions. Instead, the Court merely noted that defendant was within his legal rights in attempting to obtain a legitimate business advantage. Therefore, the result in Dye does not answer the question at hand.

Defendant cites State ex rel. Lesh v. Indiana Manufacturer of Dairy Products, 198 Ind. 288, 153 N.E. 499, 501 (1927), for the proposition that a plaintiff must affirmatively establish that an agreement has been made between some of the defendants. However, the plaintiff in that case alleged a conspiracy rather than a scheme or design as alleged in the complaint before this Court.

Plaintiff contends that whereas one could not have a combination or conspiracy unless two or more parties were involved, it would not be inconsistent for a single party to engage in a scheme or design to restrain trade. Although the words "scheme" and "design" do not by themselves appear to call for concerted action, when interpreted in the context of the other statutory language and the policies underlying antitrust legislation, the words "scheme" and "design" do connote concerted action by more than one party.

To interpret the Indiana antitrust statute, the Indiana courts have turned to decisional law under the Sherman Antitrust Act. See, Fort Wayne Cleaners and Dyers Assoc. v. Price, 127 Ind.App. 13, 137 N.E.2d 738 (1956). Recently the Indiana Court of Appeals stated in a footnote, "Section 24-1-2-1 is substantially patterned after Section 1 of the federal Sherman Antitrust Act, 15 U.S.C.A. § 1 (1970)." Citizens National Bank of Grant County v. First National Bank in Marion, 331 N.E.2d 471, 478 n. 5 (Ind.App.1975). Therefore, this Court looks to decisional law under the Sherman Antitrust Act, 15 U.S.C. § 1, and notes that a violation of Section 1 of the federal legislation "must be comprised of concerted action by separate business entities, as opposed to mere unilateral action by a single person or firm." Polytechnic Data Corp. v. Xerox Corp., 362 F.Supp. 1, 8 (N.D.Ill.1973). The Seventh Circuit in Bell v. Speed Queen, 407 F.2d 1022 (7th Cir. 1969), also looked to federal law to help interpret a different section of the Indiana antitrust legislation. There, the...