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INTERPHOTO CORP. v. MINOLTA CORP.

January 30, 1969

Interphoto Corporation, Plaintiff
v.
Minolta Corporation, Defendant


Herlands, District Judge.


The opinion of the court was delivered by: HERLANDS

HERLANDS, District Judge:

Plaintiff, Interphoto Corporation (hereinafter "Interphoto"), moving for a preliminary injunction under 15 U.S.C. § 26, § 16 of the Clayton Act, seeks to restrain pendente lite defendant Minolta Corporation (hereinafter "Minolta"), its agents, servants, employees and those persons in active concert or participation with any of them (a) from refusing to sell Minolta photographic equipment to Interphoto, and (b) from terminating Interphoto's distributorship of Minolta's products. The gist of plaintiff's charge is that Minolta is terminating Interphoto's distributorship agreement in order to preserve and further a combination and conspiracy with other distributors under which Minolta allocated territories and customers and determined and maintained resale prices.

 Plaintiff Interphoto, a Delaware corporation, is engaged primarily in the wholesale distribution of photographic equipment throughout the United States.

 Defendant Minolta, a New York corporation, distributes and sells, in the United States, photographic equipment made in Japan under the Minolta name. Minolta has distributed and sold Minolta products both through its own sales organization and through independent wholesale distributors and retail dealers.

 The complaint charges violations of Sections 1 and 2 of the Sherman Act, 15 U.S.C. §§ 1, 2 (1964). For present purposes, only the alleged violation of § 1 need be considered. *fn1" The relief demanded in the complaint is that the Court declare that there has been a violation by Minolta of § 1 of the Sherman Act; that Minolta be enjoined from continuing such violation; and that Interphoto receive treble damages for injuries sustained by reason of such violation. Interphoto has demanded a trial by jury.

 This opinion contains the findings of fact and conclusions of law which constitute the grounds of the Court's action in granting Interphoto's motion for an interlocutory injunction. Fed. R. Civ. P. 52(a). The findings of fact are, for the most part, based upon statements in the affidavits and documents submitted by plaintiff and not denied by defendant.

 Statement of Facts

 Except as may be otherwise indicated, the facts stated in this opinion represent facts found by the Court.

 Raygram-Hornstein, Inc. (hereinafter "Raygram"), is a division of Interphoto, having been acquired in July, 1967. It is engaged in the wholesale distribution in the United States of Japanese manufactured equipment, including cameras, lenses and related products. From about 1963 until July, 1967, Raygram was defendant Minolta's largest wholesale distributor.

 In July, 1967, after Interphoto's acquisition of Raygram, Interphoto entered into a contract with Minolta for the nonexclusive distribution of Minolta products. The agreement had no express termination date; it provided that either company had the right to cancel without cause on thirty days' notice. In a letter accompanying the contract, Mr. Nakamura, Minolta's president, stated that it was his intention to terminate the contract on January 31, 1968.

 On December 21, 1967, however, the parties entered into a new agreement which was also terminable by either party without cause on thirty days' notice; but it did have an express termination date of January 31, 1969.

 In the sales agreement of December 21, 1967, Minolta enumerated thirteen states in which Interphoto was prohibited from selling Minolta products. This area included states where Minolta acted as its own distributor and sold its products directly to dealers.

 Minolta apparently has entered into similar agreements with other distributors, prohibiting them from selling Minolta products in certain geographic areas. (Zimet moving Affidavit, Exh. E.)

 Minolta has prepared and circulated price lists for Minolta products, suggesting the prices at which its products should be sold by the distributors to the dealers and also at which they should be resold by the dealers. (Nakamura opposing Affidavit, para. 3.)

 Minolta has, "from time to time, when the orderly marketing of Minolta goods has been seriously threatened, made objection to wholesale distributors and retail dealers who have not honored territorial areas or adhered to suggested prices . . . ." (Nakamura Affidavit, para. 3.)

 On March 19, 1968, Minolta wrote to Mr. Zimet, Raygram's president, complaining of the following:

 
"During the past few months, your marketing programs have deviated from our present sales agreement and have caused problems in our relationship with the regional distributors. Continuation of this type of marketing can only cause a deterioration in our business relationship, as in essence you have been fluctuating the costs of Minolta merchandise to the photographic dealers.
 
* * *
 
Your present marketing programs are indicating to dealers that they can bargain for better prices. This type of merchandising must be stopped as early as possible by all concerned in your company. Otherwise, you will leave me no other alternative but to take such drastic steps that I do not feel are necessary at this moment to end this type of reckless selling methods.
 
In the future, it is important that my company be consulted at least thirty days prior to any program that you plan to set up that includes Minolta merchandise. Minolta must have the right to approve, or disapprove, any program which reflects a discount other than normally allowed dealers obtaining their Minolta requirements through all our distributors." (Zimet Affidavit, Exh. B.)

 On March 27, 1968, Minolta forwarded a confidential bulletin to all distributors designated as "Minolta Dealer Price Schedule."

 The substance of the bulletin follows:

 
"In accordance with our sales agreement, the scheduled dealer prices must be adhered to by your respective companies.
 
Therefore, so as to prevent any possible deterioration in the established dealer costs on all our products, all proposed programs must be submitted to this office for approval at least thirty days prior to your planned date of announcement. There must not be any program designed that will cause confusion to our dealers in their respective costs for any of our Minolta products." (Zimet Affidavit, Exh. C.)

 Interphoto refused to agree to control the prices at which it or its dealers resold Minolta products. It also refused to abide by Minolta's 30-day approval program. (Carney opposing Affidavit, Exh. A). Nevertheless, Minolta continued to police the pricing activities of Interphoto and its dealers, requesting reports from Interphoto when dealers sold or ...


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