Evans v. S. S. Kresge Co.

54 F.R.D. 536, 16 Fed. R. Serv. 2d 194, 1972 U.S. Dist. LEXIS 14683
CourtDistrict Court, W.D. Pennsylvania
DecidedMarch 14, 1972
DocketCiv. A. No. 71-85
StatusPublished
Cited by1 cases

This text of 54 F.R.D. 536 (Evans v. S. S. Kresge Co.) is published on Counsel Stack Legal Research, covering District Court, W.D. Pennsylvania primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Evans v. S. S. Kresge Co., 54 F.R.D. 536, 16 Fed. R. Serv. 2d 194, 1972 U.S. Dist. LEXIS 14683 (W.D. Pa. 1972).

Opinion

[537]*537OPINION and ORDER

McCUNE, District Judge.

Plaintiff, a trustee in bankruptcy, has instituted a treble damage action claiming alleged violation of the anti-trust laws.

We are confronted by two motions filed by defendant. The first is a motion for summary judgment addressed solely to the question of jurisdiction, i. e., whether or not interstate commerce has been affected in sufficient measure that an action will lie here under the anti-trust laws. The other is a motion to strike a reply by plaintiff to defendant’s counterclaim. This reply is called the plaintiff’s counterclaim.

THE MOTION FOR SUMMARY JUDGMENT

Defendant operates a great many department stores, some under the name S. S. Kresge and some under the registered trade mark, “K-Mart.” It refrains from selling food, but recognizes that the sale of food attracts people to the locations where its other merchandise is available so it licenses the name “K-Mart” to the operators of independent food stores which are usually located next door to or nearby a K-Mart department store.

The plaintiff’s bankrupt had entered into two such license agreements with defendant for the operation of food stores, one in Westmoreland County and one in Allegheny County but both near Pittsburgh within shopping centers. The bankrupt operated the stores from 1964 to 1969 when it ceased business.

The total retail volume of the two stores was about four million dollars per year, almost all of which came from the sale of groceries although the stores sold the usual non-food items (health and beauty aids, etc.) now customarily found in a food store. None of the merchandise which the licensee sold was obtained from the defendant but on the contrary from independent sources. It was all sold in the communities where the stores were situated.

Believing the operation of a food store to be a purely intrastate activity defendant filed its motion and submitted an affidavit of the director of K-Mart Supermarkets to show that the operation of this food business was entirely local in character. A counter affidavit has been presented by the owner of the bankrupt to show that the business affects interstate commerce. It is argued by defendant that the facts are sufficiently clear and undisputed that we can decide at this stage of the proceeding that the operation in question so inconsequentially affected interstate commerce as to preclude jurisdiction here even assuming there was some violation of the antitrust laws. Plaintiff of course, argues the opposite.

While defendant has shown that the major supplier of groceries was a Pennsylvania wholesaler, Fox Grocery Company, located nearby within Pennsylvania, the plaintiff has alleged that it received a substantial quantity of goods by direct shipment from out-of-state suppliers which amounted on a yearly basis to $400,000.00 at cost. Plaintiff contends that these goods were manufactured outside Pennsylvania and shipped to plaintiff for immediate resale.

Plaintiff contends that defendant regulated by the provisions of the license agreements various aspects of plaintiff’s business including the prices which the bankrupt could charge for the non-food items it carried which invariably were sold in the adjoining K-Mart stores as well, and the prices which the bankrupt could charge for food. It is alleged that food prices were fixed so that they could be no higher than those charged by other food stores to insure that the K-Mart image of a low price merchandiser would be preserved.

For the purpose of deciding this motion it is unnecessary to decide whether there were violations of the anti-trust laws or any damages resulting from [538]*538such violations. It is only necessary to decide whether there is any jurisdiction here to determine these questions.

The Supreme Court has defined interstate commerce for Sherman Act and Clayton Act purposes in the broadest terms. In Fortner Enterprises v. United States Steel Corp., 394 U.S. 495, 89 S.Ct. 1252, 22 L.Ed.2d 495 (1968) dealing with a tying arrangement the Court stated:

“ . . normally the controlling consideration is simply whether a total amount of business, substantial enough in terms of dollar-volume so as not to be merely de minimis is foreclosed to competitors by the tie, for as we said in International Salt, [International Salt Co. v. United States, 332 U.S. 392, 68 S.Ct. 12, 92 L.Ed. 20] it is ‘unreasonable per se to foreclose competitors from any substantial market’ by a tying arrangement, 332 U.S. at 396, 68 S.Ct. at 15.” Fortner Enterprises, Inc. v. United States Steel Corp., 394 U.S. 495 at 501, 89 S.Ct. at 1258.

The Court held there that purchases of $190,000.00- in prefabricated homes per year from interstate commerce was sufficient to meet the requirement of a not insubstantial amount.

The bankrupt contends that its purchases directly from interstate commerce each year were substantial within the meaning of Fortner.

The defendant however cites and places reliance on Cliff Food Stores, Inc. v. Kroger Inc., 417 F.2d 203 (5th Cir. 1969) decided subsequent to Fortner. The relevant portion of that decision dealt with the Robinson-Patman Amendment to section 2(a) of the Clayton Act, 15 U.S.C.A. § 13(a). The Court held 15 U.S.C.A. § 13(a) inapplicable to a local retail grocery operation but expressly recognized that “the language of the Act [15 U.S.C.A. § 13(a)] requiring discriminatory sales to be ‘in commerce’ as a prerequisite to jurisdiction is far narrower in scope than the ‘affect on commerce test’ applicable under the Sherman Anti-trust Act.” The Court in Cliff Food stated that in appropriate cases the Sherman Act might be applied to intrastate activities, including retail sales, if they affected interstate commerce while under the terms of section 13(a) at least one of the sales alleged to have been discriminatory must actually have been in interstate commerce. It is apparent that Cliff Foods is distinguishable from the instant case.

While there are many cases where the courts have held that local restraints on interstate commerce must be direct and substantial and not merely inconsequential, remote or fortuitous, see Lieberthal v. North Country Lanes, Inc., 332 F.2d 269 (2d Cir. 1964), and Savon Gas Stations No. Six, Inc. v. Shell Oil Co., 309 F.2d 306 (4th Cir. 1962), cited by defendant, the affidavit filed on behalf of plaintiff would bring the instant case within the holding in Fortner.

The theory of plaintiff appears to be that the alleged price fixing caused the bankrupt to be unable to continue in business and unable to continue buying goods and thus about $400,000.00 per year of merchandise ceased flowing from interstate commerce into its stores. The plaintiff argues that consequently there was an affect on interstate commerce which Fortner

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54 F.R.D. 536, 16 Fed. R. Serv. 2d 194, 1972 U.S. Dist. LEXIS 14683, Counsel Stack Legal Research, https://law.counselstack.com/opinion/evans-v-s-s-kresge-co-pawd-1972.