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BURLINGTON COAT FACTORY WAREHOUSE CORP. v. ESPRIT

November 16, 1984

BURLINGTON COAT FACTORY WAREHOUSE CORPORATION, Plaintiff, against ESPRIT DE CORP. and FEDERATED DEPARTMENT STORES, INC., Defendants.


The opinion of the court was delivered by: DUFFY

MEMORANDUM & ORDER

KEVIN THOMAS DUFFY, D.J.:

 Plaintiff, Burlington Coat Factory Warehouse Corporation ("Burlington") commenced this action against defendants Esprit De Corp. ("Esprit") and Federated Department Stores, Inc. ("Federated") pursuant to section 1 of the Sherman Antitrust Act, 15 U.S.C. § 1. Defendants now move pursuant to Fed. R. Civ. P. 56 for summary judgment.

 Esprit is a manufacturer of women's and children's clothing and accessories. Federated, through several divisions, sells clothing to retail customers. Two of Federated's well-known divisions are Bloomingdale's and Abraham & Straus. Burlington is a retailer of men's, women's, and children's clothing. Burlington's stores sell its merchandise at prices approximately twenty-five percent below those charged by traditional department stores such as those controlled by Federated.

 Between August 1982 and March 1983, Burlington submitted eleven orders to Esprit totalling $281,708. Esprit's Appendix, Exh. A (Affidavit of Leon C. Rosenberg) at 2. On average, Esprit filled 46.23 percent of Burlington's orders. Id. It is undisputed that in July 1983, Burlington submitted three orders totalling approximately $500,000. On July 29, 1983, Esprit returned all of Burlington's outstanding purchase orders. Esprit's Appendix, Exh. B. Burlington alleges that the decision by Esprit to not fill Burlington's orders was made after and as a result of a public announcement made by Federated at a June 1983 retailer's conference. Federated apparently announced that any wholesaler who supplied off-price retailers would run the risk of losing Federated's business. See Affidavit of Norman Ross, Exh. A (press release).

 Burlington alleges that Federated's announcement constituted a "threat of and an invitation by Federated to manufacturers such as Esprit to enter into an agreement and conspiracy in restraint of trade for the purpose of eliminating price competition at the retail level of the apparel market." Complaint P17. Burlington alleges also that Federated complained directly to Esprit with respect to Burlington. Id. P18.

 Esprit asserts that it was neither aware of Federated's announcement nor received complaints from Federated prior to returning Burlington's orders. Esprit claims that its decision to not sell to Burlington was unilaterally arrived at and was based on a desire to promote a certain image to the public. Esprit distinguishes itself from other clothing manufacturers by claiming to promote a "concept" by featuring a complete line of coordinated clothing and accessories to be displayed together rather than by item. See Federated's Appendix, Exh. 1 (Deposition of Leon C. Rosenberg) at 59, 74-76, 93-94. According to the national sales manager for Esprit, Leon Rosenberg, Esprit is continually becoming more popular and is increasingly unable to fill a substantial portion of its customers' orders.Id. at 56, 74. Thus, Esprit began to implement a program in late 1982 and early 1983 to sell its merchandise to only those stores who would present its apparel in such a way that would further Esprit's "concept." Id. at 74. Apparently, however, Burlington utilizes a "no frills' approach" in merchandising its goods; clothing is arranged by item on racks and fixtures. See Esprit Appendix, Exh. J (Deposition of Monroe Milstein) at 36-37.

 Rosenberg stated at his deposition that he personally reviewed Burlington's July 1983 orders because they were for such a large amount. He investigated the size of Burlington's prior orders and found the July orders to be far in excess of them. Federated's Appendix, Exh. 1 at 54-57. Rosenberg then spoke with the Esprit sales representatives who took Burlington's orders. Id. at 57. After learning about the nature of Burlington's stores, Rosenberg stated, the orders were returned. Id. at 57-60, 68.

 Thereafter, on August 30, 1983, a meeting was held in Esprit's New York showroom. It was attended by Rosenberg, one of the sales representatives who took Burlington's orders, Burlington's general merchandise manager, Norman Ross, and a Burlington sales representative, Elisa Kraemer.Id. at 68. Kraemer brought a tape recorder to the meeting concealed in her briefcase and the ensuing conversation was recorded. See Federated's Appendix, Exh. 2 (transcript of recording). Rosenberg explained to Kraemer and Ross that Esprit was decreasing the number of accounts it serviced and was evaluating various stores in terms of whether they presented the image that Esprit was seeking to convey. Id. Mr. Rosenberg discussed Esprit's decision to stop selling to several full price specialty store chains including "The Limited" to which Esprit had approximately $3 million in annual sales. Id. at 6-7. Federated was not mentioned at any point during the conversation.

 Thus, Esprit asserts that its decision to terminate its sales to Burlington was unilateral and was based on the fact that (1) Burlington's July 1983 orders were several times larger than prior orders and Esprit's ability to produce merchandise was outstripped by its ability to supply it, and (2) Burlington's method of merchandising did not comport with the image and conceptual approach desired by Esprit. In support of its contentions, Esprit notes that it has refused to sell to full-price retailers who have failed to sell conceptually and that it continues to sell to off-price retailers who do sell conceptually.

 Federated seeks summary judgment for the same reasons as are asserted by Esprit.Federated denies that any communication, threats or complaints were conveyed to Esprit. Burlington opposes defendants' motions for summary judgment principally on the ground that they are premature. Plaintiff seeks the denial of the summary judgment motions or, alternatively a continuance pursuant to Fed. R. Civ. P. 56(f) so that discovery may proceed.

 DISCUSSION

 I.

 Plaintiff does not state in its papers that a continuance is being sought under Fed. R. Civ. P. 56(f). Instead, Burlington asserts the need for additional discovery as a basis for denying defendants' summary judgment. Nonetheless, I will treat plaintiff's ...


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