Scooper Dooper, Inc. v. Kraftco Corp., 73-1836.

• Court: United States Courts of Appeals. United States Court of Appeals (3rd Circuit)
• Citation: 494 F.2d 840
• Docket Number: No. 73-1836.,73-1836.
• Parties: SCOOPER DOOPER, INC., Appellant, v. KRAFTCO CORP., Appellee.
• Decision Date: 26 March 1974

494 F.2d 840 (1974)

SCOOPER DOOPER, INC., Appellant,
v.
KRAFTCO CORP., Appellee.

No. 73-1836.

United States Court of Appeals, Third Circuit.

Argued January 25, 1974.

Decided March 26, 1974.

494 F.2d 841

COPYRIGHT MATERIAL OMITTED

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Nathan L. Posner, Victor Wright, Donald Brown, Philadelphia, Pa., for appellant; Fox, Rothschild, O'Brien & Frankel, Philadelphia, Pa., of counsel

William H. Lowery, Richard R. Rulon, John F. Wilson, III, Philadelphia, Pa., for appellee; Dechert, Price & Rhoads, Philadelphia, Pa., of counsel.

Before BIGGS, GIBBONS and GARTH, Circuit Judges.

OPINION OF THE COURT

GARTH, Circuit Judge.

Appellant Scooper Dooper, Inc., requests that this Court undertake a full-scale analysis of the antitrust implications of a qualified refusal to deal by Kraftco Corporation. Considerations of proper judicial administration require us to decline the invitation to measure Kraftco's conduct against the proscriptions of the Sherman Act. On the basis of collateral estoppel, we affirm the District Court's grant of summary judgment in favor of Kraftco.

I. PROCEDURAL HISTORY

Defendant-appellee Kraftco (formerly National Dairy Products) manufactures and distributes ice cream products under the trademarks of Sealtest and Breyers and also under private labels. Among its several plants, Kraftco operates Breyers Division processing factories in Long Island City (New York) and in Philadelphia. Kraftco's collective bargaining agreements with the New Jersey and New York locals of the Milk Drivers and Dairy Employees Union contain the following provision:

"The Company agrees for the term of this Agreement not to remove its manufacturing operations from the area of the Local and to continue to manufacture within the area of the Local, and the Company, including any affiliates or subsidiaries, agrees that it shall not establish or operate a plant for production of ice cream or frozen dessert products outside of the Local area for sale or distribution of such products in the Metropolitan Area; . . ."

The "Metropolitan Area" consists of New York City, the counties of Suffolk and Nassau in New York State, and the counties of Union, Essex, Bergen, Hudson, Passaic, Middlesex, Ocean, Somerset, Morris, Monmouth, Hunterdon, Sussex and Warren in New Jersey.

Plaintiff-appellant Scooper Dooper, Inc., a distributor of ice cream products, has found its business threatened by the above bargaining provision. Since 1963, Scooper Dooper distributed ice cream produced by Kraftco's Philadelphia plant to retailers in Delaware, Pennsylvania, and southern New Jersey. At some point in the late 1960's,¹ Scooper Dooper began selling this Philadelphia-based ice

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cream in northern New Jersey. Kraftco's New York and New Jersey unions, recognizing that this new policy meant that ice cream produced by Kraftco in Philadelphia would be sold within the Metropolitan Area, protested that their collective bargaining agreement with Kraftco had been violated. In 1969, the matter was submitted to arbitration. The arbitrator ruled that the new marketing policy violated the bargaining agreement and contravened the parties' intent to protect the labor standards achieved in the Metropolitan Area. The arbitrator ordered Kraftco to cease and desist from supplying products from its Philadelphia plant to Scooper Dooper for delivery in the Metropolitan Area

Undaunted, Scooper Dooper and Kraftco sought (in the Southern District of New York) a declaratory judgment invalidating both the bargaining agreement and the arbitration award to the extent that they precluded Scooper Dooper from reselling Kraftco's Philadelphia ice cream in the Metropolitan Area. The co-plaintiffs argued that under the doctrine of United States v. Arnold, Schwinn & Company,² 388 U.S. 365, 87 S.Ct. 1856, 18 L.Ed.2d 1249 (1967), the exclusion of Kraftco's Philadelphia goods from the northern New Jersey market constituted a per se violation of Section 1 of the Sherman Act. District Judge Frankel disagreed. In National Dairy Products Corp. v. Milk Drivers & Dairy Employees Union, Local 680, 308 F.Supp. 982 (S.D.N.Y. 1970), Judge Frankel held that:

1) Schwinn was distinguishable, in that the plaintiffs before Judge Frankel had not alleged a conspiracy;

2) Schwinn was inapplicable, since territorial restrictions of the type discussed in Schwinn had not been imposed;³ and

3) Even if the scheme were similar to that condemned in Schwinn, antitrust exemptions precluded interference by the judiciary.⁴

Accordingly, Judge Frankel ordered Kraftco to stop selling its Philadelphia products to Scooper Dooper for resale in the Metropolitan Area.

Neither of the co-plaintiffs appealed Judge Frankel's decision.

Business relations between Kraftco and Scooper Dooper deteriorated after the above-mentioned litigation. In response to measures allegedly taken by Kraftco to exclude appellant from the Metropolitan Area, Scooper Dooper resumed its practice of reselling Kraftco's Philadelphia ice cream in northern New Jersey. Kraftco, in February and March of 1971, warned Scooper Dooper that it would cease selling ice cream to Scooper Dooper if the latter continued to violate Judge Frankel's order. When Scooper Dooper failed to accede to Kraftco's demands, Kraftco notified Scooper Dooper that it would not sell its products to Scooper Dooper after March 19, 1971.

Scooper Dooper filed this action in the Eastern District of Pennsylvania on March 24, 1971. Plaintiff's complaint, as amended, charges that the enforcement of the collective bargaining provision (quoted above) constitutes a violation of Sections 1 and 2 of the Sherman Act, 15 U.S.C. §§ 1 and 2. Treble damages and injunctive relief are requested pursuant to 15 U.S.C. §§ 15 and 26.

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After taking testimony for five days, the District Court denied plaintiff's motion for a preliminary injunction on May 5, 1971. The Court held that the collateral estoppel consequences of Judge Frankel's decision, as well as the fact that Kraftco was merely complying with Judge Frankel's order, undermined the probability that plaintiff would ultimately succeed in its bid for a permanent injunction. The District Court also found that Scooper Dooper had not demonstrated the irreparable injury necessary to obtain an injunction pendente lite. Without discussing either collateral estoppel or antitrust law, we affirmed the District Court's exercise of discretion at 460 F.2d 1204 (3d Cir. 1972).

Subsequently, Kraftco moved for summary judgment or, alternatively, judgment on the pleadings. The District Court, finding no genuine issue of material fact, and relying upon both the labor exemption from the antitrust laws and the collateral estoppel consequences of the litigation in the Southern District of New York, ruled in favor of Kraftco on July 25, 1973.

Scooper Dooper appeals from the July 25th order granting summary judgment.

II. COLLATERAL ESTOPPEL

The doctrine of collateral estoppel precludes the relitigation of issues actually decided in former judicial proceedings. It is commonly recognized that the following three requirements must be satisfied before collateral estoppel may be utilized:

a) The issue decided in the prior litigation must be identical with the issue presented in the action in question;

b) The prior litigation must have resulted in a final judgent on the merits; and

c) The party against whom the estoppel is asserted must have been a party, or in privity with a party, to the prior adjudication.

See, e.g., Blonder-Tongue v. University of Illinois Foundation, 402 U.S. 313, 323-324, 91 S.Ct. 1434, 28 L.Ed.2d 788 (1971) (quoting from Justice Traynor's opinion in Bernhard v. Bank of America National Trust & Savings Association, 19 Cal.2d 807, 813, 122 P.2d 892, 895 (1942)). Classical estoppel doctrine appended a fourth element, a requirement of mutuality. This element mandates that the party asserting the estoppel also be a party, or in privity with a party, to the prior adjudication. See Restatement of Judgments, § 93 (1942).

The doctrine of mutuality has come under severe attack in recent years. See generally Blonder-Tongue v. University of Illinois Foundation, supra. This Circuit has been in the forefront of the attack. Provided that the party against whom the plea is asserted has had a full and fair opportunity to present his claim in the prior litigation, collateral estoppel is available as a defense in this Circuit regardless of whether or not the party asserting the plea was a party (or privy) to the prior litigation.⁵ See Bruszewski v. United States, 181 F.2d 419 (3d Cir.), cert. denied, 340 U.S. 865, 71 S.Ct. 87, 95 L. Ed. 632 (1950); Township of Hopewell v. Volpe, 446 F.2d 167, 171 (3d Cir. 1971).

The virtual obliteration of the mutuality doctrine in this Circuit undermines an argument advanced by Scooper Dooper to avoid the exercise of collateral estoppel herein. Pointing to the fact that Kraftco and Scooper Dooper were co-plaintiffs in the action before Judge Frankel, appellant contends that the non-adverse relationship of the parties in the prior litigation vitiates the collateral estoppel consequences of Judge Frankel's decision.⁶ In response, appellee

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relies upon a line of cases which first tangentially⁷ and then frontally⁸ attacks the adversity requirement. While in other jurisdictions such cases might be necessary to overcome the adversity requirement, this Circuit's nullification of the mutuality requirement renders non-adversity irrelevant to the doctrine of collateral estoppel. In this Circuit, a total stranger to a prior litigation may, in a subsequent suit, estop a party from re-litigating a claim which he lost in the prior controversy, provided that the initial opportunity to present the claim was full and fair. We see no reason to treat a co-plaintiff more harshly than a total stranger.⁹ Accordingly, we hold that the mere fact that Scooper Dooper and Kraftco were non-adverse...