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STAN TOGUT CORP. v. HOBART MFG. CO.

October 23, 1974

Stan Togut Corp., et al., Plaintiffs
v.
The Hobart Manufacturing Co. Defendant


Knapp, D.J.


The opinion of the court was delivered by: KNAPP

Memorandum and Order

KNAPP, D.J.:

 Plaintiffs, Stan Togut Corporation, Lawrence Togut, and L.E. Togut, Inc. (the Toguts), seek summary judgment in this antitrust action on the issue of liability, pursuant to Rules 56(a) and 56(c), Federal Rules of Civil Procedure, against the defendant, the Hobart Manufacturing Company (Hobart). Plaintiffs allege that the standard form "Sales Agency Franchise Agreement" of defendant Hobart contains territorial, customer and price restrictions which, separately and collectively, constitute per se violations of Section 1 of the Sherman Act, 26 Stat. 209, as amended, 15 U.S.C. § 1.

 In the event the motion for summary judgment is denied, plaintiffs also seek an order pursuant to Rule 56(d), F.R.C.P., specifying those facts on the issue of liability that appear without substantial controversy.

 For reasons stated herein, plaintiffs' motion for summary judgment must be denied. The Toguts have not satisfied the burden under Rule 56(c) of showing through pleadings, depositions, interrogatories, admissions, and affidavits, that "there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law."

 Furthermore, the court does not feel that it is practicable at this time to specify facts which appear without substantial controversy pursuant to Rule 56(d). Rather, this case will be referred to a Magistrate so that the parties, in accordance with the discussion to follow, can work out a pre-trial order to narrow and define the issues and undisputed facts and statistics.

 I. Background

 This antitrust action marks the termination of a relationship between the parties which dates back many years. Defendant Hobart manufactures and sells food equipment for use in supermarkets, commercial kitchens, restaurants, and other establishments where food is sold or prepared. The company also sells appliances for use in the home.

 Plaintiff, Stan Togut Corp., was Hobart's sales agent for Queens, New York, from October 1, 1962 to February 28, 1973, under a written agreement entitled "Sales Agency Franchise Agreement" (SAFA). Plaintiff, Lawrence E. Togut, was Hobart's sales agent in Brooklyn, New York, from 1950 until April 26, 1973, pursuant to the same basic form of franchise agreement. Lawrence Togut conducted his business as a sales agent under plaintiff, L.E. Togut, Inc., a New York corporation.

 Plaintiffs allege that Hobart's SAFA and Hobart's pricing policy constitutes per se violations of § 1 of the Sherman Act. Specifically, they claim in this summary judgment motion that Hobart subjected them to (1) territorial restrictions on the sale of all Hobart equipment; (2) customer restrictions on the sale of all Hobart equipment; and (3) price fixing on the sale of new Hobart equipment. Plaintiffs rely primarily on Hobart's SAFA and Sales Manual to show the per se violations. Section B(2) of the SAFA requires the sales agent:

 
"not to solicit sales of any new or used machines outside the territory granted to you; but should a prospective purchaser call upon and purchase through you, a machine for use outside your territory, or should the Sales Agent or Salesman of another territory effect a sale for use in your territory under the conditions described, the Company will determine on an equitable basis the compensation to be allowed to you and the other Agent involved, which determination shall be final."

 Section A(2) of the SAFA binds Hobart to pay a commission on all sales made in the agent's territory, except sales to the following:

 
"the Federal Government; any State or Municipal Government; for Export; Syndicate or Chain Store interests; the Kitchen Supply Trade or through such outlet; Households; or others unusual to the Company's common practice. However, the Company, at its option, may grant special commission on sales made to the foregoing which you may have originated and closed or materially assisted in closing."

 As to the price-fixing allegation, Hobart admits that it sets the prices on the sales of its new equipment, but it claims that this arrangement is perfectly valid since the company is merely pricing its own product for sale through its own agents. Indeed, the core of Hobart's defense to all the antitrust allegations is that its practices are ...


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