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SCHWIMMER v. SONY CORP. OF AMERICA

May 2, 1979

Mendel SCHWIMMER d/b/a Supersonic Electronic Co., Plaintiff,
v.
SONY CORPORATION OF AMERICA and Sony Corporation, Defendants



The opinion of the court was delivered by: NICKERSON

MEMORANDUM AND ORDER

Plaintiff, the sole proprietor of Supersonic Electronic Co., brought this action against Sony Corporation ("Sony") and Sony Corporation of America ("Sonam"), alleging violation of various antitrust laws and unfair competition.

Sonam is a wholly owned subsidiary of Sony and distributes Sony products in the United States. From December 1975 until some time in 1977 plaintiff, which sells consumer electronic products, purchased Sony products from Sonam for resale primarily to retailers. Plaintiff asserts that in 1975 and 1976 Sony sold discontinued or late model television sets and tape recorders to an American corporation named Interocean Industries, Inc. ("Interocean") at prices lower than those charged Sonam, indeed "far lower than I or anyone who bought from (Sonam) could purchase these products." Plaintiff claims that it was injured by this discrimination in price as a competitor of Interocean and of Interocean's customers. Plaintiff does not say why it did not purchase from Interocean.

 Sony moves for summary judgment dismissing the amended complaint, which charges Sony in count 3 with violations of Section 2(a) of the Robinson-Patman Act, 15 U.S.C. § 13(a),* in count 4 with violation of the Anti-Dumping Act of 1916, 15 U.S.C. § 72, and in count 6 with unfair competition.

 Section 2(a) of the Robinson-Patman Act provides in pertinent part:

 
"It shall be unlawful for any person engaged in commerce, in the course of commerce, either directly or indirectly, to discriminate in price between different purchasers of commodities of like grade and quality, where either or any of the purchases involved in such discrimination are in commerce . . . and where the effect of such discrimination may be substantially to lessen competition or tend to create a monopoly in any line of commerce, or to injure, destroy, or prevent competition with any person who either grants or knowingly receives the benefits of such discrimination, or with customers of either of them." 15 U.S.C. § 13(a).

 Sony contends that, assuming a violation of this section, plaintiff has no standing to sue to recover damages sustained as a result. Section 4 of the Clayton Act, 15 U.S.C. § 15, provides in pertinent part that "(a)ny person who shall be injured in his business or property by reason of anything forbidden in the antitrust laws may sue therefor" and recover treble damages and costs, including a reasonable attorney's fee. The Robinson-Patman Act is classified as one of the antitrust laws. Bruce's Juices v. American Can Co., 330 U.S. 743, 750, 67 S. Ct. 1015, 91 L. Ed. 1219 (1946).

 Read literally this language of Section 4 of the Clayton Act would permit the award of treble damages to anyone who could show that an antitrust violation contributed even partially or remotely to an injury to his business or property. But the courts have not given the statutory words "by reason of" any such literal interpretation. The concept of causation implies a web not a chain. For any occurrence there are innumerable causes which contribute in varying degrees to the result. Pastorello v. Koninklijke Nederl Stoomb Maats, 456 F. Supp. 882, 884 (E.D.N.Y.1978). Good sense suggests that Congress did not intend by Section 4 of the Clayton Act to permit suit for any injury logically though remotely traceable in any part to an antitrust violation. For practical reasons, if no others, the line must be drawn short of that.

 But the formulation of a comprehensible rationale as to where to mark the boundary has been difficult. Sometimes it is said that a plaintiff may sue for a "direct" injury but not for one which is "indirect" or "remote". See, e.g., Productive Inventions, Inc. v. Trico Prods. Corp., 224 F.2d 678, 680 (2d Cir. 1955), Cert. denied, 350 U.S. 936, 76 S. Ct. 301, 100 L. Ed. 818 (1956); Long Island Lighting Co. v. Standard Oil Co., 521 F.2d 1269, 1274 (2d Cir. 1975), Cert. denied, 423 U.S. 1073, 96 S. Ct. 855, 47 L. Ed. 2d 83 (1976). At other times the courts have termed the inquiry whether plaintiff lies within the "target area" of the violation. See, e.g., Calderone Enterprises Corp. v. United Artists Theatre Circuit, Inc., 454 F.2d 1292 (2d Cir. 1971), Cert. denied, 406 U.S. 930, 92 S. Ct. 1776, 32 L. Ed. 2d 132 (1972); Billy Baxter, Inc. v. Coca-Cola Co., 431 F.2d 183 (2d Cir. 1970), Cert. denied, 401 U.S. 923, 91 S. Ct. 877, 27 L. Ed. 2d 826 (1971); GAF Corp. v. Circle Floor Co., 463 F.2d 752 (2d Cir. 1972), Cert. dismissed, 413 U.S. 901, 93 S. Ct. 3058, 37 L. Ed. 2d 1045 (1973).

 But whatever the labels applied to the results any demarcation must respect the objectives of the anti-trust laws. Calderone Enterprises Corp. v. United Artists Theatre Circuit, Inc., supra, 454 F.2d at 1295-96. The purpose of Section 4 of the Clayton Act was to provide for private enforcement and deterrence of violations of the antitrust laws by permitting a recovery of treble damages. Id. This is a fearsome weapon, and care must be taken that it is placed in hands which will vindicate the objectives of the antitrust laws without imposing disproportionate burdens on defendants and the courts. The decisions of the Supreme Court in Brunswick Corp. v. Pueblo Bowl-o-Mat, Inc., 429 U.S. 477, 97 S. Ct. 690, 50 L. Ed. 2d 701 (1977) and Illinois Brick Co. v. Illinois, 431 U.S. 720, 97 S. Ct. 2061, 52 L. Ed. 2d 707 (1977), though addressing statutory issues analytically distinct from that posed here, were based on similar considerations.

 In this case it is appropriate to consider not only the objectives of Section 4 of the Clayton Act but also the language and purposes of the Robinson-Patman Act. It has been called "a singularly opaque and elusive statute." FTC v. Sun Oil Co., 371 U.S. 505, 530, 83 S. Ct. 358, 372, 9 L. Ed. 2d 466 (1963). Certainly "precision of expression" is not its "outstanding characteristic". Automatic Canteen Co. v. FTC, 346 U.S. 61, 65, 73 S. Ct. 1017, 97 L. Ed. 1454 (1953). When passed in 1936 the Act was a compromise between conflicting, perhaps irreconcilable, policy objectives, the maintenance of price competition for the benefit of the consumer and the protection of smaller business firms from competition. H.R.Rep. No. 2287, 74th Cong., 2d Sess. (1936). Subsequent uncertain and inconsistent interpretations of almost every provision of the Act have reflected its schizoid origins.

 Although Section 4 of the Clayton Act applies to injuries caused by violations of any of the antitrust laws, in determining the standing of plaintiffs alleging Robinson-Patman Act claims there are additional considerations beyond those at stake in a Sherman Act action. The very presence on the books of the treble damage remedy is presumably a deterrent not only of conduct violative of the antitrust laws but also of some conduct approaching such illegality. One faced with the possibility of such a recovery may well refrain from practices which would eventually, if litigated, be found proper. To the extent that the threat of a treble damage Robinson-Patman Act claim inhibits legal price competition that threat has social costs inconsistent with the presuppositions of our competitive society. The same cannot generally be said of the prospect of a Sherman Act claim for treble damages. Accordingly in a case of alleged price discrimination such as that alleged here the court must be cautious not to extend standing to bring suit beyond that needed for effective enforcement of the Robinson-Patman Act.

 Typically a seller's discrimination in price between purchasers will have an adverse economic impact on the disfavored purchaser or on a competing seller. Ordinarily those injured persons are available to vindicate the purposes of the Robinson-Patman Act.

 Indeed, some courts have said, without referring to Section 4 of the Clayton Act, that an individual can have no cause of action under Section 2(a) of the Robinson-Patman Act unless he is an actual purchaser from the person charged with the discrimination. See, e.g., Klein v. Lionel Corporation, 237 F.2d 13, 14-15 (3rd Cir. 1956). But in this court's opinion that goes too far. Where the seller has the specific intent that the discrimination affect a customer further down the distribution line there is no reason to disable that customer from bringing suit. See, e.g., FLM Collision Parts, Inc., v. Ford Motor Company, 406 F. Supp. 224 (S.D.N.Y.1975), Aff'd in part on other grounds, rev'd in part on other grounds, 543 F.2d 1019 (2d Cir. 1976), Cert. denied, 429 U.S. 1097, 97 S. Ct. 1116, 51 L. Ed. 2d 545 (1977). Where such intent can be shown the customer at whom the violation is aimed may well have the keenest motive to play the deterrent role. Moreover, the more ...


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