Sportmart, Inc. v. Wolverine World Wide, Inc.

• Decision Date: 02 July 1979
• Docket Number: No. 78-2053,78-2053
• Citation: 601 F.2d 313
• Parties: 1979-2 Trade Cases 62,748 SPORTMART, INC., et al., Plaintiffs-Appellants, v. WOLVERINE WORLD WIDE, INC., et al., Defendants-Appellees.
• Court: U.S. Court of Appeals — Seventh Circuit

Page 313

601 F.2d 313

1979-2 Trade Cases 62,748

SPORTMART, INC., et al., Plaintiffs-Appellants, v. WOLVERINE WORLD WIDE, INC., et al., Defendants-Appellees.

No. 78-2053.

United States Court of Appeals Seventh Circuit.

Argued April 3, 1979.

Decided July 2, 1979.

Ralph A. Mantynband, Chicago, Ill., for plaintiffs-appellants.

Charles Donelan, Worcester, Mass., for defendants-appellees.

Before PELL and WOOD, Circuit Judges, and HOFFMAN, Senior District Judge. ^*

HARLINGTON WOOD, Jr., Circuit Judge.

This case comes before this court on the plaintiff's appeal from the trial court's denial of a motion for entry of a rule upon the defendant, Henri Patty, to show cause why he should not be held in contempt for violation of an earlier judgment of the court. The controversy turns on the proper construction of a consent decree which had been signed by the parties and approved by the trial court. We note jurisdiction and, finding no error, affirm.

I.

In 1973, Sportmart, Inc., and its subsidiary, Olympic Distributors, Inc., (hereinafter referred to collectively as Sportmart) filed a complaint against Wolverine World Wide, Inc., Skis Rossignol, S.A. (Skis Rossignol), Rossignol Ski Company, Inc. (Rossignol), and the appellee, Henri Patty, among others. The complaint alleged that the defendants had violated the antitrust laws by conspiring to fix the retail prices of certain sporting goods. Sportmart is a major retailer of sporting goods in the Chicago area. The defendants are or were involved in the manufacture and distribution of Rossignol skis, Trappeur ski boots, and Kerma ski poles. Skis Rossignol is a French corporation which manufactures the ski equipment. Wolverine World Wide is a former distributor, and Rossignol a present distributor of Skis Rossignol's products in the United States. The defendant, Patty, the only defendant involved in this appeal, was first an employee of Wolverine World Wide and then sometime in 1973 became a vice-president in charge of marketing and distribution for Rossignol. The plaintiffs' complaint charged Patty as well as the other defendants with directing the distribution of Rossignol ski products and refusing to sell them to Sportmart unless Sportmart agreed to resell the products at certain retail prices.

In 1974, the parties to the suit compromised by entering into a consent degree which was approved by Judge Marshall. In return for the dismissal of plaintiffs' complaint with prejudice, Rossignol agreed, Inter alia, to "sell, for a period of five (5) years from the date of this order, all lines and all brands of skis and related equipment dealt in by ROSSIGNOL to the plaintiffs." All parties to the litigation signed the order through their counsel.

In 1976, Sportmart filed a motion in the district court for an order directing Rossignol, Skis Rossignol, and Patty to show cause why they should not be held in contempt. The motion charged that "the defendants Rossignol and its officers including defendant Henri Patty and Ski Rossignol . . . entered into an arrangement (with a ski boot manufacturer) to take over U.S. distribution of Nordica boots" and refused to sell them to Sportmart. The vehicle used to distribute the new line, the motion charged, was R.N.C., Inc., (RNC). Moreover, Henri Patty was "vice president of both the defendant Rossignol . . . and R.N.C., Inc., and would supervise their marketing structure."

After responses were made by the defendants, the district court found that Rossignol owned fifty percent of the stock of RNC, but required further development of facts on whether Rossignol controlled the new company in fact. Nevertheless, the court cautioned the defendants that it would "not tolerate frustration of the consent order by a subterfuge." Subsequently, a new consent decree was negotiated by the parties and approved by the trial court. The second decree contained, as did the first, a disclaimer by the defendants of any admission of wrongdoing. The decree provided:

Rossignol Ski Company, RNC, Inc., Skis Rossignol, S.A., and Henri J. Patty, each have agreed that they will sell for a period of five years from the date of this order (which period of time shall include the 1980-81 ski selling season) all lines and brands of all skis, boots, poles, bindings and related ski equipment dealt in by them, to the plaintiffs for resale at any location owned or operated by the plaintiffs, whether now existing or to be opened in the future in the Chicago market or elsewhere. . . . Each of the aforesaid shall fill orders received by any of them from the plaintiffs and shall follow regular and ordinary procedures in delivering merchandise to the plaintiffs. . . .

The agreement was signed for Rossignol, Skis Rossignol, and Patty by their attorney. No signature for RNC appears on the face of the document.

In 1978, Sportmart filed yet another motion to show cause in the district court, this time solely against Patty. The motion complained of the failure to Patty to sell Garmont ski boots to Sportmart. The facts concerning the events subsequent to the 1976 consent decree were developed by affidavits submitted by the parties. Garmont, S.P.A., is an Italian company which manufactures Garmont ski boots. Prior to 1977, these boots were distributed in the United States by a company unrelated to any of the parties to this action. Sportmart had been a purchaser of the boots. Garmont competed in the same market as Trappeur and Nordica boots. In June 1977, Patty terminated his association with Rossignol and RNC and became the president and one-third stockholder in a new company, Garmont, U.S.A., which soon became the exclusive U.S. distributor of Garmont boots. There is no indication in the record that either Garmont firm has any relation or affiliation whatsoever with Rossignol, Skis Rossignol, or RNC. In early 1978, Garmont, U.S.A., terminated its dealership arrangement with Sportmart.

II.

As a preliminary matter before addressing the merits, we note our jurisdiction to hear this appeal under 28 U.S.C. § 1291. A denial of a motion for civil contempt made during the course of litigation before the trial court ordinarily would not be immediately appealable; the aggrieved party must wait until final judgment before prosecuting an appeal. See Union Tool Co. v. Wilson, 259 U.S. 107, 110-11, 42 S.Ct. 427, 66 L.Ed. 848 (1922). In contrast, most post-judgment orders are final decisions within the ambit of 28 U.S.C. § 1291 as long as the district court has completely disposed of the matter. In the present case, the consent decree "operated as a final judgment. Therefore, because the motion for contempt was denied after this 'judgment' . . . and no further action by the district court was necessary to quicken the denial, the action by the district court is final and therefore reviewable." Sanders v. Monsanto Co., 574 F.2d 198, 199 (5th Cir. 1978). See Davis v. Board of School Commissioners, 517 F.2d 1044, 1052 (5th Cir. 1975), Cert. denied, 425 U.S. 944, 96 S.Ct. 1685, 48 L.Ed.2d 188 (1976); Gilbert v. Johnson, 490 F.2d 827, 829 (5th Cir. 1974); Stringfellow v. Haines, 309 F.2d 910, 911 (2d Cir. 1962).

III.

The bulk of the cases and commentary concerning the construction of consent decrees have involved decrees negotiated between the government and a private antitrust defendant. See, e. g., United States v. ITT Continental Baking Co., 420 U.S. 223, 95 S.Ct. 926, 43 L.Ed.2d 148 (1975); United States v. Armour & Co., 402 U.S. 673, 91 S.Ct. 1752, 29 L.Ed.2d 256 (1971); United States v. Atlantic Refining Co., 360 U.S. 19, 79 S.Ct. 944, 3 L.Ed.2d 1054 (1959); Hughes v. United States, 342 U.S. 353, 72 S.Ct. 306, 96 L.Ed. 394 (1952); Handler, Twenty-Fourth Annual Antitrust Review, 72 Colum.L.Rev. 1, 19-34 (1972); Note, Flexibility and Finality in Antitrust Consent Decrees, 80 Harv.L.Rev. 1303 (1967). While this case involves a consent decree between private litigants, we see no reason why the rules on the construction of consent decrees enunciated by the Supreme Court in the cases above should not govern the issue which confronts the court here.

In United States v. Armour & Co., 402 U.S. 673, 91 S.Ct. 1752, 29 L.Ed.2d 256 (1971), the Supreme Court held that consent decrees should be treated as contracts for purposes of construction. Rejecting the government's argument that the consent decree should be construed to prevent the same kinds of anticompetitive practices or effects that the government sought to enjoin in its complaint, the Court stated:

Consent decrees are entered into by parties to a case after careful negotiation has produced agreement on their precise terms. The parties waive their right to litigate the issues involved in the case and thus save themselves the time, expense, and inevitable risk of litigation. Naturally, the agreement reached normally embodies a compromise; in exchange for the saving of cost and elimination of risk, the parties each give up something they might have won had they proceeded with the litigation. Thus the Decree itself cannot be said to have a purpose; rather the Parties have purposes, generally opposed to each other, and the resultant decree embodies as much of those opposing purposes as the respective parties have the bargaining power and skill to achieve. For these reasons, the scope of a consent decree must be discerned within its four corners, and not by reference to what...