Harold Friedman, Inc. v. Kroger Company

581 F.2d 1068, 1978 U.S. App. LEXIS 10492
CourtCourt of Appeals for the Third Circuit
DecidedJune 26, 1978
Docket77-2223
StatusPublished
Cited by60 cases

This text of 581 F.2d 1068 (Harold Friedman, Inc. v. Kroger Company) is published on Counsel Stack Legal Research, covering Court of Appeals for the Third Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Harold Friedman, Inc. v. Kroger Company, 581 F.2d 1068, 1978 U.S. App. LEXIS 10492 (3d Cir. 1978).

Opinion

OPINION OF THE COURT

VAN DUSEN, Circuit Judge.

This is an appeal from an order granting defendant’s motion for summary judgment in a case brought under §§ 1 and 2 of the Sherman Act. We affirm.

I.

The record establishes the following facts. The plaintiff, Harold Friedman, Inc. (hereinafter Friedman), is a franchisee of Foodland, Inc., a national grocery store chain. Prior to the actions complained of, Friedman operated four Foodland grocery stores in the Butler, Pa., area. At the time the complaint was filed and at the time the motion for summary judgment was granted, Friedman operated five such stores. Defendant, the Kroger Company (hereinafter Kroger), is the nation’s third largest supermarket chain, operating over 1,200 stores in 20 states. During all relevant times, Kroger operated one store in the Butler area. On March 27,1959, defendant Kroger leased a store in the Greater Butler Mart shopping center. The lease entitled Kroger to the premises until October 31, 1976, with an option to renew until October 31, 1991, and contained a restrictive covenant preventing the landlord from leasing other space in the shopping center to more than one other grocery store. On September 22, 1972, Kroger decided to abandon this store and to erect a much larger “Superstore” within two miles of the shopping center and nearer to the center of Butler. Having learned of Kroger’s decision to terminate its shopping center operation from one of the owners of the shopping center, Friedman expressed to the landlord an interest in leasing Kroger’s space. The landlord informed Kroger of this, and on May 23, 1973, Kroger notified the landlord that it would abandon the space in November 1973 upon the opening of the new store, and also advised the landlord that it would attempt to find a suitable sub-tenant. Kroger’s attempts to find a sub-tenant were unsuccessful, much to the concern of the landlord, because of the adverse effect on the other tenants of having a significant portion of the shopping center vacant.

During this time, Friedman and the shopping center landlord began negotiating a lease agreement for the premises and in November 1973 entered into an agreement in principle for lease of the premises. In December 1973, the landlord informed Kroger that it had found a tenant and asked Kroger to agree to termination of the lease. On December 8, 1973, Kroger closed the shopping center store and opened its new store, but retained the shopping center premises despite the knowledge that the landlord had found a tenant. Friedman did not approach Kroger about subletting the premises and Kroger continued to seek a sub-tenant to no avail.

On January 17, 1974, Friedman and the landlord executed a lease of the premises, contingent upon the landlord’s terminating Kroger’s lease. Two weeks earlier, however, on January 4, 1974, Kroger had contracted with Harry Davis and Company, auctioneers, to auction Kroger’s equipment at the closed shopping center store. The contract provided that the equipment was to be removed by the buyer at the buyer’s risk and expense within a time specified by the auctioneer. This removal provision was standard for all prior auctions conducted by Davis for both Kroger and Friedman. On *1071 February 4, 1974, Friedman purchased the equipment at the auction with the intention of leaving it in place and opening a Food-land store on the premises. Friedman claims that he informed Davis of this intention, but in his deposition Davis states that he recalls no such conversation. On February 20, Davis reminded Friedman that the terms of the sale required him to remove the equipment, and on March 22 Kroger informed Friedman by certified mail that if Friedman did not remove the equipment by April 2, 1974, Kroger would have it moved and stored for Friedman’s account. Friedman claims that he offered to pay Kroger an amount equivalent to three months’ rent on the premises if Kroger would allow Friedman to leave the equipment in place and that Kroger refused.

In mid-April Kroger hired the Henry T. Limberg Company to remove the equipment. This removal was completed by April 19. Friedman alleges that the removal was done in such a way as to necessitate very lengthy and excessive repairs. For example, Friedman testified that pipes and copper tubing which Friedman had purchased were ripped out of the floor, causing extensive damage.

Meanwhile, the shopping center landlord sued Kroger to terminate the lease, claiming that Kroger had defaulted by allowing the premises to remain vacant. This litigation was settled on May 7, 1974, when Kroger agreed to terminate the lease. Friedman took over the premises at that time.

On August 30, 1974, Kroger notified Friedman that the removed equipment was being stored and that unless Friedman contacted Kroger immediately and reimbursed it for moving and storage costs, Kroger would resell the equipment to recover those costs. Friedman’s attorney responded that the moving and storage costs were incurred by Kroger’s unilateral action and that any sale was without Friedman’s consent. On October 29, 1974, the equipment was auctioned by Harry Davis and Company for an amount which was less than the cost of moving and storage. In November 1974, Friedman opened a Foodland store at the shopping center with new equipment.

On June 19, 1975, Friedman filed the present action, alleging that Kroger’s conduct damaged Friedman by delaying the opening of the Foodland store at the shopping center, by causing Friedman to purchase and install new equipment to replace the equipment removed and sold by Kroger’s agents, and by causing Friedman to repair the damage done when the equipment was removed from the premises. The complaint alleges that Kroger’s actions constitute violations of §§ 1 and 2 of the Sherman Act, as well as various wrongs actionable under Pennsylvania law, including interference with competition, conversion of property, interference with business relationship, and breach of contract. The district court granted defendant’s motion for partial summary judgment with respect to the counts of the complaint alleging violations of the Sherman Act. At the request of both parties, the district court expressly directed that the order granting such motion should be a final judgment in accordance with the terms of F.R.Civ.P. 54(b), thereby permitting an immediate appeal of such order.

II.

We recognize that summary judgment should be used sparingly in antitrust cases, Poller v. Columbia Broadcasting System, Inc., 368 U.S. 464, 473, 82 S.Ct. 486, 7 L.Ed.2d 458 (1961), but also understand that the Sherman Act does not purport to afford remedies for all business torts committed by or against persons engaged in interstate commerce. Hunt v. Crumboch, 325 U.S. 821, 826, 65 S.Ct. 1545, 89 L.Ed. 1954 (1945).

A. THE SECTION 1 CLAIM

Section 1 of the Sherman Act provides in relevant part: “Every contract, combination in the form of trust or otherwise, or conspiracy, in restraint of trade or commerce among the several States, or with foreign nations, is declared to be illegal *1072 . 15 U.S.C. § l. 1

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Bluebook (online)
581 F.2d 1068, 1978 U.S. App. LEXIS 10492, Counsel Stack Legal Research, https://law.counselstack.com/opinion/harold-friedman-inc-v-kroger-company-ca3-1978.