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DELTOWN FOODS, INC. v. TROPICANA PRODS.

April 26, 1963

DELTOWN FOODS, INCORPORATED, Dellwood Dairy Co., Inc., Samuel Adler, Inc. and Country Milk Co., Inc., Plaintiffs,
v.
TROPICANA PRODUCTS, INC., Citrus Bowl, Inc., Fruit Industries, Inc., Anthony T. Rossi and Santo Consiglio, Defendants



The opinion of the court was delivered by: BONSAL

Plaintiffs have brought an action under the Federal anti-trust laws, 15 U.S.C. § 1 et seq., seeking a permanent injunction and treble damages. Plaintiffs now move for a preliminary injunction, claiming that the alleged wrongful acts of the defendants are causing plaintiffs continuing and irreparable injury.

Plaintiffs are in the business of processing, packaging and distributing milk and milk products in metropolitan New York. Approximately ten years ago the plaintiffs began the distribution of Tropicana orange juice as an adjunct to their milk distributing business. Plaintiffs' attorney stated at the hearing that the distribution of orange juice constitutes approximately 3% Of their business of some fifty million dollars a year. Tropicana orange juice is chilled, fresh orange juice processed and packaged by the defendant Tropicana Products, Inc. and distributed in the New York area by defendant Citrus Bowl, Inc. Defendants' attorney stated that both the defendant corporations have substantially the same shareholders.

 In recent months the plaintiffs undertook the packaging and sale of their own chilled, fresh orange juice under the trade name 'Dellwood'. Upon learning of this, defendant Citrus Bowl, Inc. discontinued the sale of Tropicana orange juice to the plaintiffs, which led to the current action under the anti-trust laws.

 Plaintiffs now move for a preliminary injunction seeking to compel defendants to continue to deal with plaintiffs.

 The matter of a preliminary injunction having been set down for a hearing, plaintiffs called no witnesses but elected to proceed on the affidavits which had been filed with their motion. Defendants submitted opposing affidavits denying many of the material allegations of fact set forth in the plaintiffs' affidavits.

 Plaintiffs and defendants agree that the most effective and efficient method of entry into the metropolitan New York area by a large processor and packager of chilled fresh orange juice such as the defendant Tropicana is the utilization of independent milk dealers as distributors. This is because the distribution of chilled fresh orange juice to numerous retail food stores requires the use of the same refrigerated storage, handling and delivery facilities as are employed in distributing milk. The milk dealers, in addition to owning and operating the necessary facilities, have established customer relations and retail outlets. Consequently, it is difficult for an entrant into the chilled, fresh orange juice market to compete satisfactorily with the established brands unless the newcomer also utilizes milk dealers.

 Plaintiffs contend that defendants, by refusing to continue to furnish Tropicana orange juice, have conspired to violate the anti-trust laws and to create a monopoly. On the other hand, the defendants assert that once the plaintiffs undertook the packaging and distributing of their own private brand of orange juice, defendants would be committing business suicide if they continued to sell plaintiffs Tropicana, to be distributed as second best. Defendants state that they have no objection to the plaintiffs or any other distributors selling competing brands of orange juice other than the distributors' own private brand, and, indeed, it is alleged that for a period of time plaintiffs sold Minute Maid as well as Tropicana. (Plaintiffs admit that they distributed Minute Maid fresh, chilled orange juice in limited quantities from March 1961 until December 1962 when Minute Maid withdrew their juice from the market.)

 In an application for a preliminary injunction the Court must be satisfied: (1) that the plaintiffs have a reasonable chance of proving violations of the anti-trust laws at the trial, and (2) that plaintiffs will suffer irreparable damage in the interim period if the preliminary injunction is not granted.

 Included among the disputed issues of fact are:

 1. Plaintiffs contend that defendants have agreed that they will allow plaintiffs or other distributors to distribute Tropicana only on the condition that they do not also distribute a competing fresh orange juice. Defendants deny this and state that the only restriction is that the defendant Citrus Bowl, Inc. will not sell to a distributor which becomes a competitor itself by distributing its own private brand, as the plaintiffs have done in this case.

 2. Plaintiffs contend that defendants exacted promises from themselves and other distributors not to distribute competing fresh orange juice. This the defendants categorically deny.

 3. Plaintiffs state that defendants used threats and coercion against distributors and cancelled distributing arrangements with others when they distributed competing brands. This is also denied.

 4. Plaintiffs contend that defendants enjoy 70-75% Of the fresh chilled orange juice market in the New York metropolitan area. This is also denied, and plaintiffs have offered no proof. Defendant Tropicana claims that it is only one of fifteen primary processors of chilled fresh orange juice in Florida alone, many of which sell their juice under their own trademarks in the New York metropolitan area, and that some milk companies and supermarket chains sell chilled orange juice under their own private labels. Indeed, there has been no determination as to what constitutes the relevant market geographically, or the relevant market as to product.

 5. Plaintiffs contend that defendants have been offering and selling Tropicana to distributros and directly to plaintiffs' customers at unreasonably low and discriminatory prices, which defendants also deny. Defendants allege that plaintiffs sell their Dellwood orange juice at five cents less than Tropicana, so ...


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