Reborn Enterprises, Inc. v. Fine Child, Inc., 82 Civ. 2451 (ADS).

Decision Date20 June 1984
Docket NumberNo. 82 Civ. 2451 (ADS).,82 Civ. 2451 (ADS).
PartiesREBORN ENTERPRISES, INC., Plaintiff, v. FINE CHILD, INC., Andrews MacLaren, Inc., Andrews MacLaren Ltd., Ben's for Kids, Inc., James Fine, and Mark Wein, Defendants.
CourtU.S. District Court — Southern District of New York






Edmonds & Co., New York City, for defendants James Fine and Fine Child, Inc.; Robert C. Edmonds, New York City, of counsel.

Kane, Dalsimer, Kane, Sullivan & Kurucz, New York City, for defendants Andrews MacLaren, Inc., and Andrews MacLaren, Ltd.; Joseph C. Sullivan, New York City, of counsel.

Robinson, Perlman & Kirschner, P.C., New York City, for plaintiff; Allan J. Kirschner, Lawrence M. Rosenstock, New York City, of counsel.

Cohn & Blau, New York City, for defendants Mark Wein & Ben's for Kids, Inc.; Sharon Blau, Frederick H. Cohn, New York City, of counsel.


SOFAER, District Judge:

Reborn Enterprises, Inc. ("Reborn") brought this action in April 1982 against defendants, Andrews MacLaren Ltd. ("MacLaren Ltd."); Andrews MacLaren Inc. ("MacLaren Inc."); Ben's for Kids, Inc. ("Ben's"); Mark Wein ("Wein"), the since deceased former president of Ben's; Fine Child Inc. ("Fine Child"); and James Fine ("Fine"), president of Fine Child. Reborn seeks damages based upon alleged violations of federal and state antitrust laws and of common law contractual rights. Plaintiff alleges that defendants engaged in conduct constituting per se violations of section 1 of the Sherman Antitrust Act, 15 U.S.C. § 1, by forming horizontal and vertical contracts, combinations, and conspiracies to fix prices, by imposing restrictions on the territories in which various retailers could sell the MacLaren Baby Buggy, and by engaging in concerted refusals to deal and tying arrangements. Plaintiff claims that the tying arrangements were also unlawful under section 3 of the Clayton Act, 15 U.S.C. § 14. Alternatively, plaintiff maintains that the conduct amounted to an unreasonable restraint of trade under a "rule of reason" analysis. Plaintiff also alleges that defendants monopolized, attempted to monopolize, and conspired to monopolize commerce in violation of section 2 of the Sherman Act, 15 U.S.C. § 2, and that defendants Fine Child, Fine, Ben's, and Wein engaged in illegal price discrimination in violation of section 2 of the Robinson-Patman Act, 15 U.S.C. § 13(a), (d), (f). Plaintiff further claims that defendants violated sections 340 and 369-a of New York's Donnelly Act. N.Y.Gen.Bus.Law §§ 340, 369-a. Finally, Reborn contends that defendants tortiously breached contracts with Reborn and maliciously conspired to interfere with Reborn's advantageous business relationships. Thus, Reborn contends, defendants are jointly and severably liable for compensatory, treble, and punitive damages, as well as for costs and attorney's fees. Reborn requests that the court permanently enjoin defendants from refusing to sell MacLaren strollers, parts, and accessories to Reborn and order them to make such strollers, parts and accessories available to Reborn.

Defendants Fine and Fine Child counterclaimed against Reborn and its attorneys for defamation based on a letter charging defendants with illegal conduct, sent by Reborn's attorneys to all defendants on January 15, 1982. By order dated August 30, 1982, the defamation claim was severed from the antitrust claims, to be tried separately after all other issues were determined.

After exhaustive discovery, the case was placed on the ready trial calendar in January 1984. At that time, defendants raised a variety of motions which taken together seek dismissal and/or summary judgment against all plaintiff's claims. For the reasons that follow, summary judgment is granted on behalf of all defendants on the federal antitrust claims. The pendent state claims are dismissed without prejudice to plaintiff's right to pursue them in an appropriate court, in which the defamation counterclaim may also be asserted.

I. Factual Background

Reborn is a New York corporation that operates eight retail stores in New York, New Jersey, and Connecticut. Its Manhattan store is located on Third Avenue and 82nd Street. Matthew Wallis, who founded Reborn in 1976, is its president and chief executive officer. Reborn is a discount maternity shop selling primarily maternity clothing and, for a time, the MacLaren Baby Buggy. Wallis sometimes also sells non-clothing items such as wallets and pocketbooks that he acquires by buying the inventory of maternity stores which have gone out of business. Wallis' pricing policy is to buy his goods at wholesale, to determine the retail price at which other companies are selling particular items, and then to sell those items for less. Wallis 317.

MacLaren Ltd. is a relatively small British company that manufactures and sells a line of folding baby strollers and related equipment. Its goods are sold throughout Europe and in the United States. Until May 1980, MacLaren Ltd. sold its stroller directly to customers in the United States. On May 1, 1980, MacLaren Ltd. formed a wholly owned subsidiary named MacLaren Inc., a corporation organized under the laws of New York, to act as the sole distributor of its stroller in the United States. This arrangement has continued since that time, except for the period between November 1981 and May 1983, during which Fine Child acted as sole distributor for MacLaren in the United States.

Fine Child was a New York corporation, incorporated in 1975, which sold infant products to juvenile stores. Fine Child was not a prime manufacturer, but sold imported products on a finished goods basis, or on an exclusive license basis. It also sold products it designed and then subcontracted out for manufacture. Fine 11. James Fine was Fine Child's president, chief executive officer, and sole stockholder. By early 1983, when Fine Child had failed financially and had been taken over by Sassy Seat, Inc., also a juvenile goods company, Fine was hired by Sassy Seat and now serves as the company's president.

Ben's for Kids is a New York corporation consisting of a single retail store located on Third Avenue between 78th and 79th Streets. It sells furniture and clothing for children up to three years of age. Mark Wein was Ben's sole stockholder and chief executive officer during all times relevant to this litigation. His pricing policy was to charge as much as he could get for a product without losing customers. Wein 18. Ms. Kurzman, a MacLaren Inc. employee, had worked at Ben's, and her brother is currently employed there.

During the 1970's, MacLaren Ltd. invented a lightweight infant umbrella stroller which could fold easily and was virtually unbreakable. All parties agree that it is one of the finest of all baby strollers. Plaintiff claims that it is known as the "Rolls Royce" of strollers. Plaintiff's Pretrial Memorandum at 6; Kurzman 43-46. Despite its high price, it sells well because of its outstanding quality. The MacLaren stroller was originally sold in Europe. In 1979 the company decided to "test the waters" in the United States by selling at first to only one juvenile goods store while monitoring the stroller's success. Around this time, Wein spotted the stroller at a trade show in England, and arranged with MacLaren Ltd. to purchase it. From 1979 through early 1980, Ben's purchased directly from MacLaren Ltd. and was the only store in the United States carrying the stroller.

The stroller sold well at Ben's. MacLaren Ltd. was impressed with the quality of Wein's store, the relationship Wein had with his customers, and his policy of providing extensive post-sale repair service. Then and now MacLaren Ltd. has worked hard to maintain a strong, positive relationship with Ben's. Satisfied that its stroller would sell well in the United States, MacLaren Ltd. formed MacLaren Inc. to handle sales here.

In August 1980, Wallis, owner of the Reborn maternity store, located near Ben's on the Upper East Side of Manhattan, noticed the MacLaren stroller being sold at Ben's. He contacted MacLaren Inc. and sought to place an order. Barbara Kurzman, then employed by MacLaren Inc., visited Reborn. After her visit, she decided it would be unwise for MacLaren Ltd. to do business with Reborn. She reasoned that because it was a maternity shop which sold no juvenile goods, it would ill fit MacLaren's marketing strategy, which was to sell only to juvenile goods shops. Kurzman 46-49. MacLaren believed that a juvenile goods store was more suitable for selling MacLaren strollers than a maternity shop because customers have the opportunity in a juvenile goods store to compare the MacLaren stroller with strollers of other brands and the proprietor has more knowledge about strollers. Kurzman 45-46. Ms. Kurzman also felt it would be unwise for MacLaren to deal with Reborn because of its close proximity to Ben's. Kurzman explained her position to Ian Jones, Export Sales Manager of MacLaren Ltd., and to George Hambleton, Vice President of MacLaren Inc. Kurzman did, however, inform Jones that Reborn wanted to purchase the stroller. Jones made a note on a telex that he would contact Reborn in November 1980, the next time he planned to visit New York.

During Jones' visit in November, he opened new accounts in Manhattan and Brooklyn at Schneider's Juvenile Furniture, Albee's Baby Carriage, Yeedl's, Berkowitz, and Hatzlacha, all well established juvenile goods stores which sold both "hard" and "soft" goods for very young children. ("Hard" goods include juvenile furniture: strollers, high chairs, car seats, carriages, cribs, and the like, while "soft" goods include baby clothing, bibs, and other accessories.) Jones or Kurzman gave Ben's and all other retailers a "suggested price list," and asked them to try and charge about the suggested price. Kurzman 13-16; see Hambleton 73-75....

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