WINTER HILL FROZEN FOODS & SERV. v. Haagen-Dazs

• Decision Date: 19 July 1988
• Docket Number: Civ. A. No. 88-0009-XX.
• Citation: 691 F. Supp. 539
• Court: U.S. District Court — District of Massachusetts
• Parties: WINTER HILL FROZEN FOODS AND SERVICES, INC., Plaintiff, v. The HAAGEN-DAZS COMPANY, INC., the Pillsbury Co., Inc., Paul's Distributors, Inc., Dairi Farms, Inc., International Ice Cream Corp., and B & K Distributors, Inc., Defendants.

691 F. Supp. 539

WINTER HILL FROZEN FOODS AND SERVICES, INC., Plaintiff, v. The HAAGEN-DAZS COMPANY, INC., the Pillsbury Co., Inc., Paul's Distributors, Inc., Dairi Farms, Inc., International Ice Cream Corp., and B & K Distributors, Inc., Defendants.

Civ. A. No. 88-0009-XX.

United States District Court, D. Massachusetts.

July 19, 1988.

James C. Donnelly, Jr., Robert L. Hamer and Joan O. Vorster, Mirick, O'Connell, DeMallie & Lougee, Worcester, Mass., for Winter Hill Frozen Foods and Services, Inc.

Lawrence G. Green and Neill E. Silverman, Perkins, Smith, Arata & Howard, Boston, Mass., for Dairi Farms, Inc. and Paul's Distributors, Inc.

Richard Wegener, The Pillsbury Co., Minneapolis, Minn., William Miller, Pillsbury, Madison & Sutro, San Francisco, Cal., Stanley Gorrinson, Washington, D.C., and Philip J. MacCarthy, Worcester, Mass., for Haagen-Dazs Co., Inc. and Pillsbury Co., Inc.

Stanley Rudman, Dana Rodin, Rubin & Rudman, Boston, Mass., for Intern. Ice Cream Corp.

MEMORANDUM AND ORDER

YOUNG, District Judge.

Winter Hill Frozen Foods and Services, Inc. ("Winter Hill"), a frozen food distributor, brought this action against The Haagen-Dazs Company, Inc. ("Haagen-Dazs"), an ice cream manufacturer, The Pillsbury Co., Inc. ("Pillsbury"), the corporate parent of Haagen-Dazs, and the New England distributors of Haagen-Dazs products,¹ alleging that the defendants' refusal to sell Haagen-Dazs products to Winter Hill is an unlawful restraint of competition in violation of Section 1 of the Sherman Act, 15 U.S.C. sec. 1, and various state laws. This matter is presently before the Court on the motions by defendants Haagen-Dazs, Pillsbury, and International for summary judgment pursuant to Fed.R.Civ.P. 56.

I. BACKGROUND

The plaintiff Winter Hill, a Massachusetts corporation with a usual place of business in Westborough, Massachusetts, is engaged in the distribution of a full line of frozen food products to retailers in New England, New York and New Jersey ("the New England area"). Winter Hill carries approximately 1,900 frozen food items, 400 of which are ice cream products and frozen desserts. In the New England area, there are at least 189 other distributors of frozen foods.

The defendant Haagen-Dazs, a New Jersey corporation with a usual place of business in Woodbright, New Jersey, manufactures ice cream and frozen desserts products including Haagen-Dazs brand ice cream, which are distributed nationally via company-owned and selected independent distributors. Haagen-Dazs is a wholly owned subsidiary of the defendant Pillsbury, a Delaware corporation with a principal place of business in Minneapolis, Minnesota.

The defendants Paul's, Dairi Farms, International and B & K are independent authorized distributors of Haagen-Dazs products in the New England area. Although Dairi Farms and International also carry some non-dessert frozen foods, these four defendants are primarily ice cream distributors. In addition to these four distributors, Haagen-Dazs also sells its ice cream to approximately 50 independent distributors in the New England area.

Beginning in 1983, Winter Hill purchased Haagen-Dazs ice cream products from the distributor B & K and then resold the ice cream to its customers; at that time, Winter Hill was not an authorized Haagen-Dazs distributor. In 1985, Haagen-Dazs undertook to identify and correct various weaknesses in its distribution system, including those instances where its product was being sold to frozen food or warehouse distributors.² At this time, Haagen-Dazs learned that B & K was selling the Haagen-Dazs product to Winter Hill, but it believed that Winter Hill's sales of ice cream were minor and only to military purchasers. Affidavit of Michael L. Baily at 10.

After learning the extent of Winter Hill's sales to the military, Haagen-Dazs decided that B & K should not continue to supply ice cream to Winter Hill, and on August 1, 1987, Haagen-Dazs wrote B & K requesting that it discontinue sales to Winter Hill effective October 1, 1987. B & K's sales of Haagen-Dazs to Winter Hill ended on November 30, 1987.

Paul's, Dairi Farms and International have never sold — and have refused to sell — Haagen-Dazs ice cream to Winter Hill.

On January 20, 1988, Winter Hill brought this action against the named defendants to preliminarily enjoin these defendants' refusal to deal with, and to sell Haagen-Dazs products to, Winter Hill. In the complaint, Winter Hill alleges:

1) the agreement between Haagen-Dazs and its distributors to refuse sales of Haagen-Dazs products to Winter Hill is an unreasonable restraint of trade in violation of Section 1 of the Sherman Act, 15 U.S.C. sec. 1 ("Count I");

2) the agreement between Haagen-Dazs and its New England distributors to refuse sales of Haagen-Dazs products to Winter Hill is an unreasonable restraint of trade in violation of Mass.Gen.Laws ch. 93, sec. 4 ("Count II");

3) Haagen-Dazs' conduct constitutes a tortious interference with Winter Hill's contractual relations and advantageous business relationships with its existing customers ("Count III"); and

4) Haagen-Dazs' conduct constitutes unfair acts or business practices in violation of Mass.Gen.Laws ch. 93A, secs. 2 and 11 ("Count IV").

On February 16, 1988, the Court denied Winter Hill's motion for preliminary injunction without prejudice, and denied Haagen-Dazs' and Pillsbury's motion to dismiss the complaint on February 22, 1988. Defendants Haagen-Dazs, Pillsbury, and International now move the Court, pursuant to Fed.R.Civ.P. 56(c), for summary judgment on the grounds that there is no genuine issue as to any material fact and that they are entitled to judgment as matter of law.

II. DISCUSSION

Pursuant to Rule 56 of the Federal Rules of Civil Procedure,³ the party seeking summary judgment must inform the court of the basis of its motion and identify those portions of "the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any," which demonstrate the absence of a genuine issue of material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106 S.Ct. 2548, 2553, 91 L.Ed.2d 265 (1986). Where, however, the nonmoving party will bear the burden of proof on an issue at trial, "Rule 56(e) ... requires the nonmoving party to go beyond the pleadings and by her own affidavits, or by the `depositions, answers to interrogatories, and admissions on file,' designate `specific facts showing that there is a genuine issue for trial.'" Id. at 324, 106 S.Ct. at 2553; see Moody v. Maine Central R.R. Co., 823 F.2d 693, 694 (1st Cir.1987); Jako v. Pilling Co., 670 F.Supp. 1074, 1076 (D.Mass.1987), vacated and rev'd in part, 848 F.2d 318 (1st Cir.1988). Cf. Hahn v. Sargent, 523 F.2d 461, 464 (1st Cir.1975), cert. denied, 425 U.S. 904, 96 S.Ct. 1495, 47 L.Ed.2d 754 (1976) (nonmovant must establish by substantial evidence the existence of an issue of fact that is both genuine and material).

A. Counts I and II — The Alleged Antitrust Violations.

Winter Hill asserts that the agreement between Haagen-Dazs and its distributors to refuse to sell Haagen-Dazs products to Winter Hill is an unreasonable restraint of trade in violation of both Section 1 of the Sherman Act,⁴ 15 U.S.C. sec. 1, and Mass.Gen.Laws ch. 93, sec. 4.⁵ In order to survive this motion for summary judgment, Winter Hill must establish that there is a genuine issue of material fact as to whether the defendants entered into an illegal conspiracy that caused Winter Hill to suffer a cognizable injury. See Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 585-86, 106 S.Ct. 1348, 1355-56, 89 L.Ed.2d 538 (1986). Winter Hill asserts that the material issues of disputed fact are the following: 1) whether Haagen-Dazs has gone beyond the "mere announcement of a policy" and "simple refusal to deal;" 2) whether Haagen-Dazs has achieved "market power," i.e., the ability to set prices which are higher than the competition without losing the ability to sell its products; 3) whether the vertical restriction against sales to Winter Hill is harmful to competition either at the interbrand or intrabrand level, and 4) whether such harm to competition outweighs any benefit resulting from the restriction. Winter Hill's Memorandum in Opposition to Defendants' Motions for Summary Judgment at 2-3 (hereinafter "Winter Hill's Memorandum in Opposition to Summary Judgment"). On Counts I and I, Winter Hill does not succeed.

1. The Refusal to Deal.

It is a well established principle of antitrust law that "a manufacturer ... generally has a right to deal, or refuse to deal, with whomever it likes, as long as it does so independently." Monsanto Co. v. Spray-Rite Serv. Corp., 465 U.S. 752, 761, 104 S.Ct. 1464, 1469, 79 L.Ed.2d 775 (1984) (citing United States v. Colgate & Co., 250 U.S. 300, 307, 39 S.Ct. 465, 468, 63 L.Ed. 992 1919) and United States v. Parke, Davis & Co., 362 U.S. 29, 80 S.Ct. 503, 4 L.Ed.2d 505 1960). The Colgate Court explained:

The purpose of the Sherman Act is to prohibit monopolies, contracts and combinations which probably would unduly interfere with the free exercise of their rights by those engaged, or who wish to engage, in trade and commerce — in a word to preserve the right of freedom to trade. In the absence of any purpose to create or maintain a monopoly, the act does not restrict the long recognized right of trader or manufacturer engaged in an entirely private business, freely to exercise his own independent discretion as to parties with whom he will deal. And, of course, he may announce in advance the circumstances under which he will refuse to sell.

250 U.S. at 307, 39 S.Ct. at 468. Therefore, a mere unilateral refusal to deal, without more, is not cognizable under Section 1 of the Sherman Act. See, e.g., Parke, Davis, 362 U.S. at 37, 80 S.Ct. at 508; Fuchs Sugars & Syrups, Inc. v. Amstar Corp., 602 F.2d 1025, 1033 (2d Cir.), cert. denied, 444 U.S. 917, 100 S.Ct. 232, 62 L.Ed.2d...