Dillon Materials Handling, Inc. v. Albion Industries, Division of King-Seeley Thermos Company

567 F.2d 1299, 1978 U.S. App. LEXIS 12577
CourtCourt of Appeals for the Fifth Circuit
DecidedFebruary 16, 1978
Docket76-3670
StatusPublished
Cited by19 cases

This text of 567 F.2d 1299 (Dillon Materials Handling, Inc. v. Albion Industries, Division of King-Seeley Thermos Company) is published on Counsel Stack Legal Research, covering Court of Appeals for the Fifth Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Dillon Materials Handling, Inc. v. Albion Industries, Division of King-Seeley Thermos Company, 567 F.2d 1299, 1978 U.S. App. LEXIS 12577 (5th Cir. 1978).

Opinion

*1300 TUTTLE, Circuit Judge:

This is an appeal from a judgment n. o. v. entered by the district court in an antitrust case. The appellant, Dillon Materials Handling, Inc. (hereinafter “Dillon”), was the exclusive stocking distributor for the appel-lee, Albion Industries, Division of King-See-ley Thermos Co. (hereinafter “Albion”), in the Dallas, Texas area from November 1971 until March 1974. Albion terminated Dillon’s distributorship in March 1974, and Dillon responded with this law suit, alleging violations of section 1 of the Sherman Act and section 3 of the Clayton Act. Following an 11-day trial, the district court submitted the case to the jury, which held for the defendant on the Sherman Act claim 1 and for the plaintiff on the Clayton Act claim. 2 The district court, however, granted defendant’s motion for judgment n. o. v. on the Clayton Act claim, precipitating this appeal. We affirm.

This litigation involves the caster industry, which may be divided into three basic categories: decorative, institutional and commercial, and industrial. Within each category, different types of casters are further identifiable by capacity and application. “Decorative” casters normally are used on furniture, while “institutional and commercial” casters are used on various carts and other rolling equipment commonly found in hospitals, schools and department stores. “Industrial” casters encompass those products whose attributes include a higher load capacity and reliability. At least 25 manufacturers 3 compete on a nationwide basis for a share of the markets represented by each of the three categories described above. During the relevant time period, Albion did not offer an institutional line, but did produce the “most complete line” of industrial casters.

Around January 1969, Dick Davis, who later became president of Dillon, was appointed a distributor for the “Colson” line of casters in the Dallas, Texas area. Specifically, Davis purchased the “Colson Southwest Branch” in Dallas, thereby acquiring $34,000 worth of inventory, a place of business and three employees. At the time Colson did not offer a decorative line and its industrial line, in Davis’ opinion, was not “complete.” Over two years later, in May 1971, Davis purchased Dillon Scale and Equipment Company, which he combined with the Colson Southwest Branch. Davis eventually acquired a line of decorative casters manufactured by Shepherd Products, U.S., Inc. and began marketing Colson and Shepherd casters under a new corporate name, Dillon Materials Handling, Inc.

Davis thereafter surveyed his competition and determined that no other company in the Dallas market was offering a complete line of casters or emphasizing casters as a primary product in the materials handling field. 4 He decided to capitalize on this void and began a search for a more complete line of industrial casters to combine with the Colson and Shepherd lines. Other distributors suggested that he attempt to secure the Albion line, since it was considered to be “the most complete line in the market.” Davis’ initial attempt to secure the Albion distributorship in Dallas failed. However, when the extant distributor, A. C. Andrews Co., went bankrupt in 1971, Davis initiated negotiations which led to the appointment *1301 of Dillon as an Albion distributor. After meeting with Albion’s sales manager, Bud Fierke, and president, John Karmalski, Davis secured the Dallas distributorship for Dillon in November 1971.

Davis characterized Dillon’s relationship with Albion during 1972 as “super.” Sales of Albion’s products approached $100,000 for that year. In March 1973, however, Davis was visited by Albion’s newly appointed sales manager, Bob Brettelle, who told Davis that “Albion [wanted] some more business from Dillon.” 5 Brettelle suggested that “[y]ou can start by giving us some of that Colson business.” He also complained about the fact that Davis had opened a cart fabrication business in Oklahoma. 6 Brettelle did not return to Dallas in 1973.

After Brettelle’s visit, the relationship between Albion and Dillon “deteriorated.” Dillon experienced increased delays in obtaining shipments from Albion and, in addition, lost two sizeable accounts during the year. 7 Finally, in February 1974, Brettelle made a return visit to Dallas and terminated Dillon’s distributorship. Subsequent conversations between Davis and Richard Dobbins, who succeeded Karmalski as president of Albion on January 1,1972, failed to alter Albion’s position. The Dallas distributorship subsequently was awarded to Casters of Dallas, Inc. (hereinafter “Casters”), a materials handling concern formed by Wes Hale and Truman Powers. Hale served as president of Casters, while Powers was president of B & F Casters, a Houston, Texas company that held the Albion distributorship in Houston.

On September 19, 1974, Dillon filed suit against Albion, alleging numerous violations of the federal antitrust laws. The specific allegation involved in this appeal is that Albion imposed on its distributors an exclusive dealing policy which required the distributors not to sell casters manufactured by Albion’s competitors, in violation of section 3 of the Clayton Act. 8 Dillon claimed that its distributorship was terminated because of non-compliance with the policy and that it lost sales as a result. 9 The jury concluded that Albion had violated section 3 in the manner alleged and award- *1302 ed damages to Dillon. A judgment n. o. v. was entered by the district court because there was “insufficient evidence to support the jury’s implicit finding that the effect of any exclusive dealing agreement may have been to substantially lessen competition or tend to create a monopoly in a line of commerce.” 10 It is from this judgment that Dillon appeals and to which we must now turn our attention..

In pertinent part, section 3 of the Clayton Act provides:

It shall be unlawful for any person engaged in commerce, in the course of such commerce, to lease or make a sale or contract for sale of goods, ... on the condition, agreement, or understanding that the lessee or purchaser thereof shall not use or deal in the goods . of a competitor or competitors of the lessor or seller, where the effect of such lease, sale, or contract for sale or such condition, agreement, or understanding may be to substantially lessen competition or tend to create a monopoly in any line of commerce.

15 U.S.C. § 14. Since there was no question that Albion was engaged in commerce or that the Dillon-Albion distributorship agreement was a contract for the sale of goods, Dillon’s burden of proof at trial was two-fold.

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Bluebook (online)
567 F.2d 1299, 1978 U.S. App. LEXIS 12577, Counsel Stack Legal Research, https://law.counselstack.com/opinion/dillon-materials-handling-inc-v-albion-industries-division-of-ca5-1978.