Sterling Drug v. Anderson

• Decision Date: 08 December 1954
• Docket Number: 906.,Civ. No. 900,905
• Citation: 127 F. Supp. 511
• Parties: STERLING DRUG, Inc., v. William Ernest ANDERSON et al. COLGATE-PALMOLIVE COMPANY v. William Ernest ANDERSON et al. LEVER BROTHERS COMPANY v. William Ernest ANDERSON et al.
• Court: U.S. District Court — Eastern District of Tennessee

127 F. Supp. 511

STERLING DRUG, Inc., v. William Ernest ANDERSON et al.

COLGATE-PALMOLIVE COMPANY v. William Ernest ANDERSON et al.

LEVER BROTHERS COMPANY v. William Ernest ANDERSON et al.

Civ. Nos. 900, 905, 906.

United States District Court, E. D. Tennessee, N. E. D.

December 8, 1954.

Cox, Epps, Miller & Weller, Johnson City, Tenn., Rogers, Hoge & Hills, New York City, for plaintiffs.

Simmonds, Bowman & Herndon, Johnson City, Tenn., Morison, Murphy, Clapp & Abrams, Washington, D. C., for defendants.

ROBERT L. TAYLOR, District Judge.

A motion has been filed by defendants to remit plaintiffs to the state courts on questions relating to the Tennessee Fair Trade Law, Code, § 6770.1. Actions were commenced in the three cases for injunctive relief against the selling by defendants of certain of plaintiffs' trade-mark-bearing products below retail list prices furnished by plaintiffs. In case No. 900, plaintiff sues, also, for damages. The Sperry and Hutchinson Company intervened as a defendant for the reason that trading stamps furnished by this company allegedly were involved in the cut-rate practices of defendants, the litigation, therefore, being a threat to the intervenor's interests.

Certain defenses raised by the intervenor and other defendants involve questions of state constitutionality and validity of the state fair trade law. These are: That the state fair trade law violates Article I, secs. 8 and 22, and Article II, sec. 17, of the Constitution of Tennessee; that it is invalid because inconsistent with the state's anti-trust law, Code, § 5880; also, that it was invalid when enacted because inconsistent with the Sherman Anti-Trust Law, 15 U.S.C.A. § 1, and has not been re-enacted since enactment of the McGuire Act, 15 U.S.C.A. § 45, which purported to cure the inconsistency in this and similar state acts. The state law is further objected to on the grounds that it goes beyond the police powers of the state and is an invalid delegation to private persons of state powers.

Questions raised by these defenses could be answered by reference to state court decisions, were any to be found. Except Frankfort Distillers Corp. v. Liberto, 190 Tenn. 478, 230 S.W.2d 971, which upheld the Tennessee Fair Trade Act as to art. I, sec. 22, the questions stated above have not been answered by the state courts in reported opinions. Other defenses raised are of federal, or of mixed state and federal character. As to the state's viewpoint on questions of mixed character, there is to be found no help in state court decisions. Questions purely federal in description are not considered in disposition of the motion to remit.

Motion to remit is construed by the Court to mean that further action on the merits and on federal questions should be stayed until the parties have had sufficient opportunity to commence appropriate proceedings in a state court looking to a decision of those questions which can be determined with finality only by the state's appellate courts. Commencement of such proceedings would then operate as a stay until their termination. If it should be held in the state courts that the state's fair trade act is invalid, that would be sufficient ground for dismissal of the cases here. But if the fair trade act should be upheld in the state courts, the actions here would then proceed.

A great number of decisions have been examined in an effort to discover a controlling principle, if any exists. It appears that there are no situations in which the federal court must remit the parties to the state courts. There are, however, a number of situations in which the federal court should so remit the parties, a duty that is regarded as so compelling as to amount, for all practical purposes, to a mandate. The problem arises only in those cases involving state law, or state action, and questions of state law or constitutionality are presented which have not been adjudicated by the state courts.

A considerable number of decisions concern actions brought in federal court for relief against questionable state law, or some form of allegedly invalid state action. In such cases the practice has uniformly been to remit the parties to the state courts. See, as illustrative of this group, Alabama Public Service Commission v. Southern R. Co., 341 U.S. 341, 71 S.Ct. 762, 95 L.Ed. 1002; Shipman v. Du Pre, 339 U.S. 321, 70 S.Ct. 640, 94 L.Ed. 877; A. F. of L. v. Watson, 327 U.S. 582, 66 S.Ct. 761, 90 L.Ed. 873; Spector Motor Service v. McLaughlin, 323 U.S. 101, 65 S.Ct. 152, 89 L.Ed. 101; Railroad Commission of Texas v. Pullman Co., 312 U.S. 496, 61 S.Ct. 643, 85 L.Ed. 971; City of Chicago v. Fieldcrest Dairies, 316 U.S. 168, 62 S.Ct. 986, 86 L.Ed. 1355.

Another group presents the opposite situation, namely, actions brought for relief in accord with state law, or state action. In these cases the practice has not been to remit the parties to the state courts. Illustrative of this group are, Meredith v. City of Winter Haven, 320 U.S. 228, 64 S.Ct. 7, 88 L.Ed. 9; Cohen, Friedlander & Martin Co. v. Massachusetts Mut. Life Ins. Co., 6 Cir., 166 F.2d 63; Campania Engraw Commercial E. Industrial S. A. v. Schenley Distillers Corp., 9 Cir., 181 F.2d 876; Janes v. Sackman Bros. Co., 2 Cir., 177 F.2d 928; Preston v. Aetna Life Ins. Co., 7 Cir., 174 F.2d 10; Brownell v. Suehiro, 9 Cir., 206 F.2d 892; Harlow v. Ryland, 8 Cir., 172 F.2d 784.

Whether the relief sought is against state action, or in accord with it, does not, however, present a clear line of demarcation between those cases where the parties are, and those where the parties are not, remitted to the state courts. Most of the cases cited in the last group would fall into a third classification, namely, those in which the parties must not be remitted to the state courts. This third group includes those cases where diversity exists and plaintiffs seek in the federal courts enforcement of some right arising under state law, common or statutory. Whether state law, or the right claimed, or the defense asserted, has been construed by the state courts is of no decisive consequence. In the absence of state case law in such cases, the federal courts will place their own construction upon the state statute, right, or matter of defense. In so doing, they will use what materials are available in an effort to decide as they anticipate the state courts would have decided. But they will not hesitate to reach a decision merely because...