Peerless Dental Supply Co. v. Weber Dental Mfg. Co.
| Decision Date | 02 April 1968 |
| Docket Number | Civ. A. No. 42985. |
| Citation | 283 F. Supp. 288 |
| Parties | PEERLESS DENTAL SUPPLY CO., Inc. v. WEBER DENTAL MANUFACTURING COMPANY and Heinsheimer Dental Supplies, Inc. |
| Court | U.S. District Court — Eastern District of Pennsylvania |
Israel Packel, Philadelphia, Pa., for petitioner.
A. E. Hurshman, Philadelphia, Pa., for respondents.
Plaintiff Peerless Dental Supply Co. has in the past been the authorized distributor of the products of defendant Weber Dental Manufacturing Co. On or about April 10, 1967, plaintiff alleges, defendant Weber suddenly and without cause discontinued plaintiff's distributorship, replacing Peerless with defendant Heinsheimer Dental Supplies, Inc. In this connection, continue plaintiff's allegations, defendant Heinsheimer unlawfully conspired with Weber to restrain Peerless from doing business with its regular customers, thereby violating section 1 of the Sherman Antitrust Act, 15 U.S.C. § 1.
The issue before us concerns only the defendant distributor, Heinsheimer. Assuming plaintiff's factual allegations to be true for the purposes of its motion, defendant Heinsheimer asserts that these do not make out a case under the Sherman Act as to it, and consequently moves this court for summary judgment, pursuant to Fed.R.Civ.P. 56. From the affidavits submitted by plaintiff Peerless in its original case, its claim of an antitrust violation as to Heinsheimer appears to be based on the averment that Heinsheimer in league with Weber replaced plaintiff as the supplier of plaintiff's former customers, in particular, joining with defendant manufacturer Weber in the false representation to a former Peerless customer in at least one instance that Peerless was out of business and could not fill the requested order. Our task is to test the sufficiency of this allegation as to defendant-petitioner Heinsheimer under 15 U.S.C. § 1.
Section 1 of the Sherman Antitrust Act, as has long been construed by the Supreme Court, prohibits combinations or conspiracies in unreasonable restraint of trade, 15 U.S.C. § 1; Standard Oil Co. of New Jersey v. United States, 221 U.S. 1, 58, 61-62, 75, 31 S.Ct. 502, 55 L.Ed. 619 (1911). An exclusive dealership, such as here involved, not part of a scheme to monopolize or fix prices, "has invariably been upheld as a reasonable restraint of trade," Packard Motor Car Co. v. Webster Motor Car Co., 100 U.S.App.D.C. 161, 243 F.2d 418, 420, cert. denied, 355 U.S. 822, 78 S.Ct. 29, 2 L.Ed.2d 38, rehearing denied, 355 U.S. 900, 78 S.Ct. 259, 2 L.Ed.2d 197 (1957).
In the Packard case, the facts presented an even more compelling dilemma than here. There the largest of three competing Packard dealers in Baltimore threatened to quit unless Packard awarded it an exclusive contract. Packard agreed, set its plans in motion, and one of the other dealers brought suit under Sherman §§ 1, 2, 15. Reversing a $190,000 jury verdict for plaintiff, the District of Columbia Circuit noted that the facts that other dealers in the same product were eliminated and that one of the competing dealers had requested the arrangement did not make it illegal; for these were the natural characteristics of the birth of an exclusive dealership, itself not illegal under the Sherman Act, id. at 421; accord, Schwing Motor Co. v. Hudson Sales Co., 138 F.Supp. 899 (D.Md.), aff'd, 239 F.2d 176 (4th Cir. 1956), cert. denied, 355 U.S. 823, 78 S.Ct. 30, 2 L.Ed.2d 38 (1957).
A different, if related, issue was raised by a recent Supreme Court case involving automobile dealers who conspired to prevent some of their competitors also holding franchises from General Motors from directly or indirectly selling Chevrolets at a discount. Unlike the instant case of a sole distributor replaced by another, in United States v. General Motors, 384 U.S. 127, 86 S.Ct. 1321, 16 L.Ed.2d 415 (1966), as the Court there stressed:
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