Pink Supply Corp. v. Hiebert, Inc.

• Decision Date: 01 May 1985
• Docket Number: Civ. No. 4-84-77.
• Citation: 612 F. Supp. 1334
• Parties: PINK SUPPLY CORP., Plaintiff, v. HIEBERT, INC., Northern Design Products, Inc., Interior Design Products, Inc., Michael Ketcham, and John Brion, Defendants.
• Court: U.S. District Court — District of Minnesota

612 F. Supp. 1334

PINK SUPPLY CORP., Plaintiff, v. HIEBERT, INC., Northern Design Products, Inc., Interior Design Products, Inc., Michael Ketcham, and John Brion, Defendants.

Civ. No. 4-84-77.

United States District Court, D. Minnesota, Fourth Division.

May 1, 1985.

COPYRIGHT MATERIAL OMITTED

Bradley G. Clary, Marko J. Mrkonich, Cheryl L. Appledorn, Oppenheimer, Wolff, Foster, Shepard & Donnelly, St. Paul, Minn., for plaintiff.

Daniel R. Shulman, Margaret M. Shulman, Patricia A. Knipe, Gray, Plant, Mooty, Mooty & Bennett, Minneapolis, Minn., for defendants.

MacLAUGHLIN, District Judge.

This matter is before the Court on defendants' motion for summary judgment on plaintiff's federal antitrust claims. The Court will grant that motion. Defendant Hiebert, Inc. also seeks summary judgment on its counterclaim for goods sold and delivered. The Court will deny that motion.

BACKGROUND

Plaintiff Pink Supply Corporation (Pink) is a distributor of office furniture in the Minneapolis, Minnesota area. Defendant Hiebert, Inc. (Hiebert) is a manufacturer of wood office furniture which has Carson, California as its principal place of business, and which transacts business in the Minneapolis area. The other corporate defendants in this action are Northern Design Products, Inc. (Northern) and Interior Design Products, Inc. (Interior). Both Northern and Interior are manufacturers' representatives for Hiebert, as they both assist Hiebert in the solicitation of business and promotion of Hiebert products. Neither Northern nor Interior actually buy or sell Hiebert products. Northern has Minneapolis as its principal place of business and Interior, a Missouri corporation, has transacted business in Minneapolis.¹ The remaining two defendants are Michael Ketcham and John Brion. Ketcham is currently president of Northern, and he previously was president of Interior. Ketcham founded both Interior and Northern.² Brion was formerly an employee of Ketcham's at both Northern and Interior. Prior to working for Ketcham, Brion worked at Pink. Currently, Brion is a self-employed manufacturer's representative.

In 1973, Pink began carrying the Hiebert line as one of the lines of furniture Pink sold. Hiebert terminated Pink as a dealer of Hiebert products in May of 1983. Pink claims that this termination came without warning. After the dealership termination, Pink states that it tried to return to Hiebert recently purchased merchandise, but Hiebert would not accept it. Pink further states that it had to sell this Hiebert merchandise at a greatly reduced price. Apparently, once Pink no longer carried Hiebert merchandise, Pink's customers were reluctant to purchase Hiebert products from Pink.

At the time Hiebert terminated Pink's dealership, Hiebert had two other dealers in the Minneapolis area: Dayton's Commercial Interiors (Dayton's) and St. Paul Book & Stationery (St. Paul Book). After Hiebert terminated Pink, Hiebert designated Metropolitan Office Equipment Furniture (Metro) as another Hiebert dealer. Subsequently, Hiebert terminated St. Paul Book's dealership as well. (St. Paul Book sold only minimal amounts of office furniture.) Hiebert now states that it intends to appoint another dealer in the Minneapolis area.

Pink's termination as a Hiebert dealer came shortly after Pink secured a contract to supply the First Bank of Ridgedale with office furniture. Prior to Pink submitting its bid on the project, defendant Ketcham allegedly told Pink's president, Robert Wernick, that the First Bank of Ridgedale project was a "Dayton's spec." Pink, nevertheless, submitted a bid on the project which turned out to be the low bid. After Pink won the First Bank of Ridgedale account, Dayton's sales representative, Dick Mesjak, allegedly told Ketcham that Mesjak was upset that First Bank of Ridgedale had even requested bids for the project, because Mesjak had spent three years working on the First Bank of Ridgedale account.

Pink argues that Hiebert terminated Pink as part of a price fixing and boycott conspiracy in violation of section 1 of the Sherman Act, 15 U.S.C. § 1.³ Pink reasons that because it was selling Hiebert furniture at prices lower than Dayton's and other Hiebert dealers, Dayton's and defendants conspired to eliminate Pink as a dealer to remove price competition. Plaintiff adds that pressure from Dayton's led to the conspiracy to eliminate plaintiff's dealership.

Defendants totally deny that the termination of Pink's dealership was motivated by a desire to eliminate price competition. Defendants also deny the existence of any conspiracy or concerted action. Defendants argue that Hiebert permissibly terminated Pinks' dealership because of a concern over customer relations. Defendants further state that Pink was a free-rider in that instead of generating new business, Pink capitalized on other dealers' efforts in competing for business.

Defendant Hiebert also asserts a counterclaim for $59,179.95 for goods sold and delivered to Pink. Pink admits having received these goods, but asserts that he does not have to pay for them for a variety of reasons, including failure of consideration, estoppel, and fraud. Pink also argues that the Court should not enforce the contract obligating Pink to pay for these goods because the contract is inextricably intertwined with defendants' antitrust violations.

DISCUSSION

Summary Judgment

A defendant is not entitled to summary judgment unless the defendant can show that no genuine issue exists as to any material fact. Fed.R.Civ.P. 56(c). Summary judgment is an extreme remedy that should not be granted unless the moving party has established a right to judgment with such clarity as to leave no room for doubt and unless the nonmoving party is not entitled to recover under any discernible circumstances. E.g., Vette Co. v. Aetna Casualty & Surety Co., 612 F.2d 1076, 1077 (8th Cir.1980). In considering a summary judgment motion, a court must view the facts most favorably to the nonmoving party and give that party the benefit of all reasonable inferences that can be drawn from the facts. E.g., Hartford Accident & Indemnity Co. v. Stauffer Chemical Co., 741 F.2d 1142, 1144-45 (8th Cir.1984). The nonmoving party may not merely rest upon the allegations or denials of the party's pleading, but must set forth specific facts, by affidavits or otherwise, showing that there is a genuine issue for trial. Salinas v. School District of Kansas City, 751 F.2d 288, 289 (8th Cir.1984).

Summary judgment "`should be used sparingly in complex antitrust litigation where motive and intent play leading roles, the proof is largely in the hands of alleged conspirators, and hostile witnesses thicken the plot.'" Willmar Poultry Co. v. Morton-Norwich Products, Inc., 520 F.2d 289, 293 (8th Cir.1975), cert. denied, 424 U.S. 915, 96 S.Ct. 1116, 47 L.Ed.2d 320 (1976), quoting Poller v. Columbia Broadcasting System, Inc., 368 U.S. 464, 473, 82 S.Ct. 486, 491, 7 L.Ed.2d 458 (1962). Yet, "where there has been ample opportunity for discovery, summary judgment is appropriate in antitrust litigation, just as in any other litigation, upon a showing by the movant of an absence of any genuine issue of material fact." Willmar Poultry Co., 520 F.2d at 293. At the time defendants made their motion for summary judgment in the present action, all parties had conducted extensive discovery and the deadline for conducting discovery had passed.

Finally, in ruling on a summary judgment motion, the Court should consider only evidence that will be admissible at trial. Fed.R.Civ.P. 56(e); Filco v. Amana Refrigeration, Inc., 709 F.2d 1257, 1260 (9th Cir.), cert. dismissed ___ U.S. ___, 104 S.Ct. 385, 78 L.Ed.2d 331 (1983); see also McSpadden v. Mullins, 456 F.2d 428, 430 (8th Cir.1972); Chambers v. United States, 357 F.2d 224, 228 (8th Cir.1966).

Conspiracy With Agents

As a preliminary issue, the Court will determine whether, as a matter of law, defendant Hiebert is capable of conspiring with defendants Northern, Interior, Ketcham, or Brion⁴ within the meaning of the Sherman Act. For purposes of the Sherman Act, a corporation cannot conspire with its own officers or employees. Copperweld Corp. v. Independence Tube Corp., ___ U.S. ___, 104 S.Ct. 2731, 2741, 81 L.Ed.2d 628 (1984); Morton Buildings of Nebraska, Inc. v. Morton Buildings, Inc., 531 F.2d 910, 917 (8th Cir.1976). In addition, a parent corporation cannot conspire with a wholly-owned subsidiary. Copperweld Corp., 104 S.Ct. at 2742.

Here, Northern and Interior are not subsidiaries of Hiebert, but rather Northern and Interior are separate corporations. As manufacturers' representatives, Northern and Interior also represent other manufacturers besides Hiebert. As employees of Northern and Interior, Ketcham and Brion were never actually employees of Hiebert. Neither ever received a salary from Hiebert, although Hiebert pays Ketcham commissions on the basis of net sales. Both sides in this litigation agree that Northern, Interior, Ketcham, and Brion were, at the relevant time, all agents of Hiebert.

A corporation can conspire with its agents if the agents are aware of the anti-competitive purpose for which they are being used. Albrecht v. Herald Co., 390 U.S. 145, 149-50, 88 S.Ct. 869, 871-72, 19 L.Ed.2d 998 (1968). In Albrecht a newspaper publisher hired an outside agent to lure customers away from an independent newspaper retailer. The agent sought to convince the customers to cease delivery from the independent retailer and commence direct delivery from the publisher. The agent was partially successful in its solicitation and a number of customers switched to direct delivery from the publisher. The publisher subsequently engaged another independent retailer to deliver newspapers. The Supreme Court concluded that a combination within the meaning of the Sherman Act existed between the publisher, the solicitating agent, and the replacement independent retailer. Albrecht, 390 U.S. at 150, 88 S.Ct. at...