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DAVIS & CO. AUTO PARTS v. ALLIED CORP.

December 22, 1986

DAVIS & CO. AUTO PARTS, INC., Plaintiff,
v.
ALLIED CORPORATION, Defendant



The opinion of the court was delivered by: KRAM

MEMORANDUM OPINION AND ORDER

SHIRLEY WOHL KRAM, U.S.D.J.

Plaintiff, Davis & Co. Auto Parts, Inc. ("Davis"), remanufactures and distributes rebuilt brake products for the automotive "aftermarket", which is the market for replacement parts. Davis also maintains a retail store in the South Bronx from which it sells aftermarket automobile parts to the general public. Plaintiff contends that the remanufacturing and distribution of rebuilt brake produces makes up about seventy percent of its business, and its sales from its retail store make up the other thirty percent.

 Defendant, Allied Corporation ("Allied"), is a corporation engaged in the manufacture and sale of a wide variety of products, including supplies for the automotive aftermarket. The subdivision of the defendant involved in this case is the Allied Aftermarket Division, which now includes what was previously the Bendix Corporation. The Allied After market Division manufactures and sells precut and presized linings for use in the manufacture of rebuilt brake products.

 Davis has done business with the Bendix Corporation, or its corporate successor, for the past thirty years. According to the current contract, entered into on September 24, 1985, Bendix supplies Davis with precut and presized linings and Davis sells the remanufactured brakes in a box labeled "using Bendix products". On October 9. 1986, the Allied Aftermarket Division informed Davis that the contract between the two companies was terminated effective November 15, 1986. The Allied Aftermarket Division's termination notice provided that Davis could place its final order -- not to exceed customary monthly orders -- by that date.

 Davis brings four claims against Allied. It alleges Allied (1) engaged in unlawful monopolization and an unlawful attempt to monopolize, in violation of Section 2 of the Sherman Act, 15 U.S.C. § 2, (2) engaged in unfair competition; (3) committed prima facie tort; and (4) breached its contract.

 Plaintiff seeks a preliminary injunction restraining Allied from (1) refusing to deal with Davis, (2) discontinuing regular monthly shipments to Davis of the full line of precut and presized friction linings and other related materials necessary for and relating to the remanufacture of automotive brake shoes and disc brake pads used on passenger cars and light and medium truck, and (3) in any way interfering with or limiting Davis' ability regularly to purchase from Allied the full range of such linings which Davis has customarily purchased from Allied in the past or to continue remanufacturing and distributing a sufficient and well-balanced inventory of remanufactured brake shoes and pads from the Bendix line. In response, defendant moves for summary judgment on each of plaintiff's claims.

 This Court held an evidentiary hearing on December 1-2, 1986. The Court heard testimony from Rafel Katz, President and co-owner of Davis, Placido Buda, President of Bonded Brakes, Inc., Christopher Jones, an employees of the Allied Aftermarket Division, and Ronald Miskelley, Product Manager for friction products in the Allied Aftermarket Division. The Court also received pleadings, affidavits, and exhibits from both parties.

 On December 2, 1986, the Court granted a temporary restraining order in plaintiff's behalf. On December 11, 1986, the Court extended the temporary restraining order though December 21, 1986, in order to maintain the status quo pending disposition of plaintiff's motion for preliminary injunction.

 I. PRELIMINARY INJUNCTION

 In order to obtain a preliminary injunction in this Circuit, a plaintiff must demonstrate both (a) irreparable harm, and (b) either (1) a likelihood of success on the merits, or (2) sufficiently serious questions going to the merits to make them fair grounds for litigation and a balance of hardships tipping decidedly in its favor. In re Feit & Drexler, Inc., 760 F.2d 406, 415 (2d Cir. 1986); Kaplan v. Board of Education of the City School District of the City of New York, 759 F.2d 256, 259 (2d Cir. 1985).

 Merits

 Antitrust Claim

 To prove a monopoly under § 2 of the Sherman Act, a plaintiff must show two elements: (1) the possession of monopoly power in the relevant market, and (2) the willful acquisition or maintenance of that power as distinguished from growth or development as a consequence of a superior product, business acumen, or historic accident. United States v. Grinnell Corp., 384 U.S. 563, 570-571, 16 L. Ed. 2d 778, 86 S. Ct. 1698 (1966); ...


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