Haagen-Dazs Co. v. Double Rainbow Gourmet Ice Creams, Inc.

691 F. Supp. 1262
CourtDistrict Court, N.D. California
DecidedJune 23, 1988
DocketMDL No. 682, No. C-85-6553-CAL
StatusPublished
Cited by3 cases

This text of 691 F. Supp. 1262 (Haagen-Dazs Co. v. Double Rainbow Gourmet Ice Creams, Inc.) is published on Counsel Stack Legal Research, covering District Court, N.D. California primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Haagen-Dazs Co. v. Double Rainbow Gourmet Ice Creams, Inc., 691 F. Supp. 1262 (N.D. Cal. 1988).

Opinion

OPINION AND ORDER FOR SUMMARY JUDGMENT

LEGGE, District Judge.

Cross motions for summary judgment have been made by all of the present par[1264]*1264ties to this litigation, Haagen-Dazs, Double Rainbow and Two Count. The motions were briefed, argued and submitted. The court has reviewed the moving and opposing papers, the factual record on which the motions and oppositions are based, the record in the case, the arguments of counsel, and the applicable authorities. The court directs that summary judgment be entered in favor of Haagen-Dazs and against Double Rainbow and Two Count, as discussed below.

The Cases

This multi-district litigation presently consists of three actions. No. C-85-6553 is brought by Haagen-Dazs against Double Rainbow and Two Count. Haagen-Dazs seeks a declaration that its arrangements with its distributors do not violate law, and that certain acts of Double Rainbow constitute unfair competition under California law. No. C-86-0853 is brought by Double Rainbow against Haagen-Dazs. It alleges violations of sections 1 and 2 of the Sherman Act and two common law torts. Action No. C-87-2471 is brought by Two Count against Haagen-Dazs. It alleges violations of California’s Cartwright Act, breach of contract, unfair business practices under California statute, and three state law torts.

All three of these actions have one central issue: Whether Haagen-Dazs can lawfully have exclusive distribution. That is, whether Haagen-Dazs can sell only to distributors who agree not to sell competing brands of ice cream. The central facts are simple and undisputed. Two Count was formerly a Haagen-Dazs distributor. When Two Count decided to sell other brands of ice cream competing with Haagen-Dazs, including Double Rainbow ice cream, Haagen-Dazs advised Two Count that it would terminate Two Count as a distributor unless Two Count agreed to handle only Haagen-Dazs. Two Count declined to do so. Haagen-Dazs then terminated Two Count and obtained another distributor. Haagen-Dazs believes that exclusive distribution is in compliance with law, while Two Count and Double Rainbow contend that exclusive distribution violates state and federal antitrust laws.

The Summary Judgment Motions

Discovery is virtually completed. A trial date had been set, but was vacated for the making and determination of these summary judgment motions.

In its summary judgment motion, Haagen-Dazs in essence seeks complete summary judgment against Double Rainbow and Two Count on their claims against Haagen-Dazs. In No. C-86-0853, it seeks summary judgment on Double Rainbows’ three antitrust claims and two common law claims. It also seeks summary judgment in No. C-87-2471 on Two Count’s state antitrust claims, breach of contract claim, and three common law claims. In its own action, No. C-85-6553, Haagen-Dazs seeks a declaration that its distribution arrangements do not violate law.1 Double Rainbow and Two Count oppose Haagen-Dazs’ motion, and seek summary judgment of their own declaring (a) that the relevant market is “super premium” ice cream, and (b) that by virtue of collateral estoppel, Haagen-Dazs’ policy of exclusive distribution is coercive.

The Factual Record

Since discovery has been completed, the parties have been able to submit to the court an extensive factual record. In evaluating that factual record, and its effect on these summary judgment motions, the court is guided by the principles for evaluating summary judgment motions in antitrust eases stated by the United States Supreme Court in Matsushita Elec. Industrial Co. v. Zenith Radio, 475 U.S. 574, 585-588, 106 S.Ct. 1348, 1355-57, 89 L.Ed. 2d 538 (1986). The parties opposing summary judgment, here primarily Double Rainbow and Two Count, must do more than simply show that there is some doubt [1265]*1265as to material facts. They must come forward with “specific facts showing that there is a genuine issue for trial.” Id. at 587, 106 S.Ct. at 1356 (emphasis in original). And where the record taken as a whole could not lead a rational trier of fact to find for the opposing parties, there is no genuine issue for trial.2 Id. The record in this ease demonstrates that most of the material facts are indeed undisputed.

Haagen-Dazs3 manufactures and sells ice cream products and other frozen deserts, including Haagen-Dazs brand ice cream. Its products are sold to distributors, who in turn resell them to grocery stores, restaurants and other retailers. Haagen-Dazs ice cream is (a) made of high quality natural ingredients, (b) contains a low volume of air, and (c) is high in butterfat. These three characteristics cause Haagen-Dazs’ ice cream to be referred to in the industry as “super premium” or “luxury” ice cream. Haagen-Dazs was the first such high quality ice cream to be distributed throughout the United States.

Two Count is a wholesale distributor of ice cream. It sells to retail outlets located throughout Northern California. It buys products from various manufacturers and resells them to retailers for Two Count’s own account.

Double Rainbow manufacturers and sells its own brands of ice cream products, which are of a quality that competes with Haagen-Dazs’ ice cream.

Haagen-Dazs’ marketing strategy is that its products be distributed only in accordance with its announced marketing policies and procedures. Pursuant to its marketing policies, Haagen-Dazs refuses to sell its products to any distributor who also sells another brand of ice cream that Haagen-Dazs regards as comparable and competitive, based on such considerations as quality, image, packaging, price, and public perception. Haagen-Dazs’ policy of distributor loyalty, or exclusive distribution, was announced to its distributors as early as 1981.

Two Count became a distributor of Haagen-Dazs ice cream in Northern California in 1976. The arrangements between Two Count and Haagen-Dazs were oral. No term of duration was stated or agreed upon by implication. For many years, Two Count exercised its best efforts to establish and build sales of Haagen-Dazs products in Northern California. However, in February 1985 Two Count entered into a written distribution agreement with Double Rainbow, providing for Two Count’s distribution of Double Rainbow’s ice cream. Two Count was aware of Haagen-Dazs’ policy that if a distributor represents brands competing with Haagen-Dazs, that would create a conflict of interests unacceptable to Haagen-Dazs. Two Count was aware, prior to agreeing to distribute Double Rainbow’s products, of Haagen-Dazs’ distribution policies and that Haagen-Dazs was concerned about Two Count’s handling competitive lines such as Double Rainbow. The agreement between Two Count and Double Rainbow required Two Count to exert its best efforts in distributing Double Rainbow products, and contained a minimum purchase requirement of one million pints in the years 1985 and following. Two Count did not inform Haagen-Dazs of this arrangement until after Two Count and Double Rainbow executed their written contract. Two Count then advised Haagen-Dazs that it.intended to distribute Double Rainbow products, in order to generate additional sales volume for Two Count.

In March 1985, Haagen-Dazs confirmed that Two Count was undertaking distribution of Double Rainbow products.

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Carter v. Variflex, Inc.
101 F. Supp. 2d 1261 (C.D. California, 2000)
In Re Super Prem. Ice Cream Distrib. Antitrust Lit.
691 F. Supp. 1262 (N.D. California, 1988)

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Bluebook (online)
691 F. Supp. 1262, Counsel Stack Legal Research, https://law.counselstack.com/opinion/haagen-dazs-co-v-double-rainbow-gourmet-ice-creams-inc-cand-1988.