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SCHULMAN v. BURLINGTON INDUS.

June 28, 1966

Emilie Schulman, Hosiery by Emilie, Inc., and Harem Hosiery, Inc., Plaintiffs
v.
Burlington Industries, Inc., et al., Defendants


Frankel, D.J.


The opinion of the court was delivered by: FRANKEL

Memorandum

FRANKEL, D.J.:

 Plaintiffs, who own and operate in Chicago stores selling women's hosiery at retail, have filed a four-count complaint against (1) Burlington Industries, Inc., a manufacturer of women's hosiery, among other products, (2) Parklane Hosiery Company, Inc., which is both a wholesale distributor and an operator of retail stores selling women's hosiery, and (3) several officers and employees of these defendant corporations. *fn1" The second and third counts, which are not of direct concern at this time, allege, respectively, breach of a restrictive agreement by Parklane and wrongful inducement of that breach by Burlington. The first and fourth counts, which do concern us now, seek treble damages under Section 4 of the Clayton Act (15 U.S.C. § 15) for various alleged violations of the antitrust laws. The Burlington defendants (except for one individual) have moved under Rule 12(b)(1) and (6) to dismiss the first and fourth counts for lack of jurisdiction over the subject matter and failure to state claims upon which relief can be granted. Alternatively, under Rule 12(f), these defendants move to strike, in whole or part, sundry paragraphs of the first and fourth counts as well as one paragraph (59) of the third count. *fn2"

 I.

 The first count, involving Sections 1 and 2 of the Sherman Act (15 U.S.C. §§ 1 and 2), Sections 2(a), (d), (e), and (f) of the Clayton Act, as amended by the Robinson-Patman Act (15 U.S.C. § 13(a), (d), (e), and (f)), and Sections 4, 12 and 15 of the Clayton Act (15 U.S.C. §§ 15, 22, and 26), after identifying the parties, alleges the following facts to be taken as true for purposes of the motion: Plaintiffs, variously styling their stores as "Albert's," "Albert's Hosiery," or "Albert's Hosiery Stores," purchase substantial quantities of the hosiery they sell from one Albert Hayes, who distributes in interstate commerce to plaintiffs and other retailers throughout the United States. The stores plaintiffs operate, along with those of defendant Parklane and other competitors selling women's hosiery exclusively, "constitute a separate, substantial and distinct area of competition * * *." *fn3" Burlington and Parklane (in its role as distributor) compete with Albert Hayes.

 Before 1954, the first count continues, Albert Hayes bought substantial quantities of hosiery from Burlington, but such purchases became only occasional thereafter. From 1953 to 1957 Albert Hayes sold to Parklane substantially all of the latter's hosiery requirements. In the years covered by the complaint, and until the present time, Burlington has attempted "to coerce and induce said Albert Hayes to purchase all or substantially all of his hosiery requirements from defendant Burlington." As part of this attempt, Burlington induced Parklane to cease buying from Albert Hayes and to buy from Burlington instead. At the same time the several defendants entered into a "combination, conspiracy, contract and plan" the purposes of which included, unless Albert Hayes agreed to purchase all his requirements from Burlington, action "to injure or to destroy the businesses of plaintiffs and other customers of said Albert Hayes so as to coerce and induce them to cease doing business with him and instead to do business with defendant Burlington, * * * [and] to injure and prevent competition in the sale of women's hosiery at retail between customers * * * of said Albert Hayes, including, among others, the * * * plaintiffs herein, * * * and the stores owned, controlled by or affiliated with defendant Parklane * * *." In further implementation of the conspiracy, Burlington agreed to and did extend credit to Parklane on terms more favorable than those given to other Burlington customers, financed the opening of new Parklane stores, gave discriminatorily favorable prices to Parklane, and extended other benefits and assistance to Parklane "which were not available, or not available on proportionately equal terms, to all of defendant Burlington's other hosiery customers." *fn4" Also in pursuance of the conspiracy, paragraph 31 of the complaint alleges, Parklane agreed to and did open retail stores close to plaintiffs' "for the purpose of injuring them and coercing and inducing them to cease dealing with * * * Albert Hayes and to deal instead with defendant Burlington." Since the opening of these Parklane stores (in 1960), defendants Burlington and Parklane have pressured plaintiffs either to sell their stores to defendants "or to agree to buy * * * all or substantially all of the hosiery requirements for said stores from the defendants Parklane and Burlington." Parklane has, as part of this effort, interfered with plaintiffs' leasing agreements and "engaged in other unfair methods of competition." Moreover, the pattern of tactics described in paragraph 31 is said (par. 32) to have been duplicated by defendants in other cities around the country. Other acts of unfair competition - threats, misrepresentations, interference with employees and customers - all in furtherance of the conspiracy, are also alleged.

 The first count ends with allegations of damage to plaintiffs, injuries to purchasers of women's hosiery, and public injury in the form of obstructions and restraints in interstate commerce.

 The fourth count, also attacked by defendants' motion, incorporates the first, and adds the second (breach of covenants) and third (inducement of the breach) as being additional "acts * * * in furtherance of the aforesaid conspiracy."

 II.

 "In appraising the sufficiency of the complaint we follow, of course, the accepted rule that a complaint should not be dismissed for failure to state a claim unless it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief." Conley v. Gibson, 355 U.S. 41, 45-6, 2 L. Ed. 2d 80, 78 S. Ct. 99 (1957). This general principle applies with at least its customary force in suits under the antitrust laws. E.g., United States v. Employing Plasterers Assn., 347 U.S. 186, 98 L. Ed. 618, 74 S. Ct. 452 (1954); cf. Nagler v. Admiral Corporation, 248 F.2d 319, 322-24 (2d Cir. 1957); Poller v. Columbia Broadcasting System, Inc., 368 U.S. 464, 473, 7 L. Ed. 2d 458, 82 S. Ct. 486 (1962). Its application requires denial of defendants' motion. *fn5"

 1. Defendants argue that plaintiffs are really complaining about alleged injuries to Albert Hayes and fail to "allege some direct injury to themselves caused by defendants' violation of the antitrust laws." It is not necessary in disposing of this contention to conjure with the legal subtleties generated by rules couched in terms of "direct" versus "indirect" consequences. Nor is it necessary to consider whether this notion of "direct" injury has any place at all in this context when "allegations adequate to show a violation and, in a private treble damage action, that plaintiff was damaged thereby are all the law requires." Radiant Burners v. Peoples Gas Co., 364 U.S. 656, 660, 5 L. Ed. 2d 358, 81 S. Ct. 365 (1961); and see Note, 64 Colum. L. Rev. 570, 581-88 (1964). For the cases, whatever their factual and verbal diversities, make clear at a minimum that one qualifies as a private antitrust plaintiff when "the violation is directly aimed" at him or he has been "directly harmed" by it. Productive Inventions v. Trico Products Corp., 224 F.2d 678, 679 (2d Cir. 1955), cert. denied, 350 U.S. 936, 100 L. Ed. 818, 76 S. Ct. 301 (1956); see also Steiner v. 20th Century-Fox Film Corporation, 232 F.2d 190, 193 (9th Cir. 1956); cf. South Carolina Council of Milk Producers v. Newton, 360 F.2d 414 (4th Cir. 1966). *fn6" Plaintiffs allege enough to meet even this debatably stringent test.

 The complaint charges a conspiracy expressly and purposefully aimed at coercing and injuring the plaintiffs as identified targets. It does not matter that defendants, under the allegations, may be conspiring to produce the restraints hurting plaintiffs only as part of an overall scheme to reach still bigger game. A conspiracy, in antitrust law as elsewhere, may have a variety of objects and victims. Continental Ore Co. v. Union Carbide & Carbon Corp., 370 U.S. 690, 698-99, 8 L. Ed. 2d 777, 82 S. Ct. 1404 (1962). The complaint alleges injury direct and specific enough when it charges that defendants conspired by a course of predatory tactics to put plaintiffs out of business and thereby destroy the interstate trade between plaintiffs and Albert Hayes.

 2. Defendants argue that plaintiffs lack standing to complain of the alleged Robinson-Patman violations because they are neither competitors nor customers of Burlington. In considering this point, we assume with defendants that paragraph 38 states an inadvertent falsehood when it describes plaintiffs as purchasers from Burlington (see note 4, supra), although it may be doubted, strictly speaking, whether such an assumption is permitted on a motion to dismiss. We assume further - as plaintiffs also do, at least arguendo - that plaintiffs have no right of action for Robinson-Patman violations in the form of discriminations among Burlington customers if they neither buy from nor compete with Burlington. See Klein v. Lionel Corporation, 237 F.2d 13, 14-15 (3d Cir. 1956); Bolick-Gillman Company v. Continental Baking Company, 206 F. Supp. 151 (D. Nev. 1961). These premises do not lead to the dismissal defendants seek.

 Unlawful conspiracies commonly consist in part of conduct entirely lawful in itself. Thus, there is no actionable wrong in the mere fact that a competitor (here, Parklane) sets up shop in close proximity to an existing enterprise. The same may be said for present purposes of the alleged special benefits and advantages extended by Burlington to Parklane to make the latter a more effective competitor. But these steps may serve as "part of the sum of the acts which are relied upon to ...


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