Sun Cosmetic Shoppe v. Elizabeth Arden Sales Corp., 18
| Decision Date | 01 December 1949 |
| Docket Number | No. 18,Docket 21333.,18 |
| Citation | 178 F.2d 150 |
| Parties | SUN COSMETIC SHOPPE, Inc. v. ELIZABETH ARDEN SALES CORPORATION. |
| Court | U.S. Court of Appeals — Second Circuit |
Morris Siegel, New York City, for appellant.
Townley, Updike & Carter, New York City (John R. Schoemer Jr., New York City, and J. Howard Carter, New York City, of counsel), for appellee.
Before L. HAND, Chief Judge, and SWAN and CLARK, Circuit Judges.
This appeal is from a judgment, summarily dismissing an amended complaint under Federal Rules of Civil Procedure, rule 56, 28 U.S.C.A., on the ground that there was "no genuine issue as to any material fact", in an action by the plaintiff for treble damages under the Robinson-Patman Act.1 The following facts, appearing in the complaint and the accompanying affidavits, are to be taken as true. The plaintiff is a New York corporation, doing business in the City of New York, and the defendant is a Delaware corporation, which until January 1st, 1948, was the sole distributor of the cosmetic products of another corporation, Elizabeth Arden, Inc.; but which on that day leased the plant of Elizabeth Arden, Inc., and thereafter manufactured and sold the same products on its own account. The plaintiff owns a retail shop for the sale of cosmetics in the City of New York; its customers live in New York and New Jersey; and from 1938 until May, 1948, it was one of the defendant's "agencies" to sell the products of Elizabeth Arden, Inc. The defendant sold its products broadly during the time of the plaintiff's "agency," not only in New York and New Jersey, but in other states; and it supplied some "agencies" with assistants, known as "demonstrators," whose salaries it paid, in whole or in part; but the plaintiff was not among those to whom it did furnish a "demonstrator." The complaint alleged that "as a result of such discrimination" it "has been damaged in the sum of $15,600." Thus it appears that the complaint will permit the introduction of evidence to prove that the use of "demonstrators" by the plaintiff's New York and New Jersey competitors resulted in diverting some of its customers to them; and we shall dispose of the appeal upon this assumption. (The complaint also alleged that the defendant discriminated against the plaintiff "in allowing discounts, rebates, allowances or advertising charges to various competitors" in New York and New Jersey; but since it did not specify what these were, we shall confine ourselves to the discrimination in "demonstrators.") The judge dismissed the complaint upon the ground that all the transactions between the parties were in intrastate commerce and were therefore not covered by subdivisions (d) and (e) of Section 13 of the Robinson-Patman Act.
We held in Elizabeth Arden, Inc. v. Federal Trade Commission2 that the same discrimination of which the plaintiff here complains was a violation of subdivision (e) of the Robinson-Patman Act;3 following the Eighth Circuit4 which had read this subdivision as though the words, "engaged in commerce," were written into it, as they were in subdivision (d). This ruling leaves open only two questions in the case at bar; first, whether it was an actionable wrong to deny the plaintiff, whose business is altogether intrastate, a favor which the defendant granted to "agencies" in other states; and second, whether, if so, it was necessary under Rule 9(g) to allege "special damages."
It would not inevitably follow that the Act would have been beyond the power of Congress, even though it had expressly prescribed that a seller should not discriminate between his intrastate customers as well as between his interstate; for it might be necessary to go so far, in order effectively to prevent discrimination between interstate customers. If that had been necessary, the situation would be within the doctrine of the Shreveport case.5 Be that as it may, it was not necessary to regulate the defendant's intrastate transactions in order to prevent the defendant through its New Jersey "agencies" from discriminating against the plaintiff. The Act does not undertake to forbid a seller to grant favors to his customers, any more than it undertakes to compel him to grant them; it only insists that the distribution, if any, shall be equal. Congress clearly had power to control the terms of the defendant's contracts with its New Jersey "agencies"; and that was power enough, because equality involves only a comparison of two terms to be equalized, and may be achieved either by raising or by lowering one of them. Thus, the defendant violated the Act when it granted "demonstrators" to its New Jersey "agencies," regardless of whether it could have been compelled to grant a "demonstrator" to the plaintiff. True, the injury suffered by the plaintiff was to its intrastate business, but that is irrelevant. It is enough that the wrong be one of federal cognizance; its consequences are actionable whether or not they affect interests which are also of federal cognizance. To recover for injuries done by a violation of the Food, Drug, and Cosmetic Act, 21 U.S.C.A. § 301 et seq., for example, the sufferer need not himself be engaged in any federal activity; federal legislation is passed for the benefit of all citizens whom it may affect; the means provided to protect their interests must be within the constitutional powers of Congress, but the interests protected need not be.
The defendant answers that this conclusion runs counter to the decision of the Supreme Court in Federal Trade Commission v. Bunte Brothers,6 but an analysis of that decision shows the contrary. The Federal Trade Commission had there determined that, in selling candy, "break and take" packages were an "unfair method of competition", because they made the purchase a kind of a gamble. Although Bunte Brothers sold candy in "break and take" packages only within the State of Illinois, their use of them imposed a competitive handicap upon those candy makers who imported candy into that state, and whom the Commission had forbidden to use such packages. In order to put these importers on even terms with Bunte Brothers, the Commission ordered Bunte Brothers to "cease and desist" from using "break and take" packages; and it was this order that the...
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