Sun Cosmetic Shoppe v. Elizabeth Arden Sales Corp.

• Decision Date: 04 December 1948
• Docket Number: Civ. 47-258,47-259.
• Citation: 81 F. Supp. 547
• Parties: SUN COSMETIC SHOPPE, Inc. v. ELIZABETH ARDEN SALES CORPORATION. MIRROR COSMETIC SHOPPE, Inc. v. ELIZABETH ARDEN SALES CORPORATION.
• Court: U.S. District Court — Southern District of New York

81 F. Supp. 547

SUN COSMETIC SHOPPE, Inc. v. ELIZABETH ARDEN SALES CORPORATION.

MIRROR COSMETIC SHOPPE, Inc. v. ELIZABETH ARDEN SALES CORPORATION.

Civ. 47-258, 47-259.

United States District Court S. D. New York.

December 4, 1948.

Morris Siegel, of New York City, for plaintiffs.

Townley, Updike & Carter, of New York City (J. Howard Carter and John R. Schoemer, Jr., both of New York City, of counsel), for defendant.

HULBERT, District Judge.

Defendant moves for summary judgment or in the alternative seeks an order dismissing the complaint in each action, urging that this court lacks jurisdiction over the subject matter of the actions and further contends that the complaints are insufficient in law.

The plaintiffs, Sun Cosmetic Shoppe, Inc. and Mirror Cosmetic Shoppe, Inc., are New York corporations, and bring these actions under the Robinson-Patman Act, 15 U.S.C.A. § 13, to recover from the defendant $46,800 in each action, as treble damages for alleged violations of the Act.

Plaintiffs, engaged in the retail sale of cosmetics, allege that defendant designated plaintiffs in 1938 as agencies to sell its products, that up to May 1948 defendant represented to plaintiffs that it sold its goods to plaintiffs at the same price and upon the same terms as it was affording to plaintiffs' competitors. It is further claimed by plaintiffs that demonstrators were furnished to some of defendant's customers, who were competitors of plaintiffs, but not to the plaintiffs. Plaintiffs also allege that they continued to purchase defendant's products until May 1948, when they learned of the alleged discrimination, i. e. defendant was making rebates or allowances to plaintiffs' competitors in the City of New York and furnishing some of them with services and facilities not afforded to plaintiffs.

Defendant, Elizabeth Arden Sales Corp., is a Delaware corporation, and "it has its offices and principal place of business at 681 Fifth Avenue New York, New York." All of defendant's officers have business addresses in this state, and most of them reside here as well.

Prior to January 1, 1948, all cosmetics manufactured by Elizabeth Arden, Inc., a New York corporation, were purchased from it by defendant for resale to cosmetic retailers. These cosmetics were manufactured in New York.

On January 1, 1948, defendant leased the manufacturing plant from Elizabeth Arden, Inc., and since that time has manufactured the cosmetics. "It is at that location alone that Elizabeth Arden cosmetics are manufactured, packaged in containers, and made ready for shipment to retailers."

Plaintiffs' orders were made and filled in New York from stocks held by defendant at its Long Island City, N. Y., plant. Deliveries were made wholly within the City of New York, where they were offered by plaintiffs for sale to the retail trade.

On the argument of these motions it was admitted that defendant is generally engaged in interstate commerce. Defendant also admits that some of the raw materials used in the manufacture of cosmetics were acquired by Elizabeth Arden, Inc., or by Elizabeth Arden Sales Corp. from sources outside the state of New York.

Defendant argues that since the wrongs complained of took place wholly within intrastate commerce there has been no violation of the Robinson-Patman Act; that merely because defendant is generally engaged in interstate commerce does not mean that defendant is subject to that Act in regard to the transactions in question here.

Plaintiff's position, on the other hand is that since the defendant has engaged in interstate commerce generally it "thereby became amenable to the provisions of the Robinson-Patman Act in all of its transactions including those that might have been local or intrastate." The transactions involved in these actions, according to plaintiffs, are part of the overall picture of interstate activity engaged in by the defendant.

The applicable sections of the statute involved in this case are subdivisions (a) dealing with unlawful price discrimination, (d) and (e) of section 1 of the Robinson-Patman Act, 15 U.S.C.A. § 13, which read as follows:

"(d) It shall be unlawful for any person engaged in commerce to pay or contract for the payment of anything of value to or for the benefit of a customer of such person in the course of such commerce as compensation or in consideration for any services or facilities furnished by or through such customer in connection with the processing, handling, sale, or offering for sale of any products or commodities manufactured, sold, or offered for sale by such person, unless such payment or consideration is available on proportionally equal terms to all other customers competing in the distribution of such products or commodities.

"(e) It shall be unlawful for any person to discriminate in favor of one purchaser against another purchaser or purchasers of a commodity bought for resale, with or without processing, by contracting to furnish or furnishing, or by contributing to the furnishing of, any services or facilities connected with the processing, handling, sale, or offering for sale of such commodity so purchased upon terms not accorded to all purchasers on proportionally equal terms." (Italics for emphasis.)

While the latter subdivision does not contain the clauses "engaged in commerce" and "in the course of such commerce" that subdivision (d) contains, this language is to be read into subdivision (e). Elizabeth Arden Sales Corp. v. Gus Blass Co., 8 Cir., 1945, 150 F.2d 988, 161 A.L.R. 370, certiorari denied 326 U.S. 773, 66 S.Ct. 231, 90 L.Ed. 467; Elizabeth Arden, Inc., v. Federal Trade Commission, 2 Cir., 1946, 156 F.2d 132.

The Robinson-Patman Act grew out of an investigation made by the Federal Trade Commission, aided by a strong lobby. Its purpose was to curb the advantageous buying position of large chain stores. 46 Yale Law Journal 447. The act does not, however, affect chain stores alone; rather by the use of broad language it is applicable to all classes of marketing. 80 Cong.Record 6674 (April 30, 1936).

There is no doubt that the defendant is a "person engaged in (interstate) ...