Kealey Pharmacy & Home Care Service, Inc. v. Walgreen Co.

607 F. Supp. 155
CourtDistrict Court, W.D. Wisconsin
DecidedApril 19, 1984
Docket80-C-522-C
StatusPublished
Cited by5 cases

This text of 607 F. Supp. 155 (Kealey Pharmacy & Home Care Service, Inc. v. Walgreen Co.) is published on Counsel Stack Legal Research, covering District Court, W.D. Wisconsin primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Kealey Pharmacy & Home Care Service, Inc. v. Walgreen Co., 607 F. Supp. 155 (W.D. Wis. 1984).

Opinion

OPINION AND ORDER

CRABB, Chief Judge.

This civil action is before the court after trial to the court on the issue of damages only. In earlier decisions, I denied plaintiffs’ motions for preliminary and permanent injunctions prohibiting the termination of their Walgreen dealerships and I granted partial summary judgment to plaintiffs on the issue of defendant’s liability for damages resulting from the termination of plaintiffs’ Walgreen dealerships. 539 F.Supp. 1357.

From the evidence adduced at the trial, and from the stipulations of the parties, I make the following findings of fact.

FACTS

Plaintiffs are independently owned drugstores located in southern Wisconsin.

Defendant Walgreen Company is an Illinois corporation with its principal place of business at 200 Wilmot Road, Deerfield, Illinois, 60015. It is engaged in the manufacture and sale of pharmaceuticals, drugs, and toiletries, and also owns and operates drugstores throughout the United States.

Plaintiff Kealey Pharmacy & Home Care Service, Inc. is a 4200 square foot drugstore located in Janesville, a city of 51,100. It was acquired by James Kealey as a Walgreen agency store in May, 1965. When he bought the store, Kealey believed the Walgreen agencyship to be an important factor in the purchase. Before he agreed to the purchase, Kealey checked with both the Walgreen agency representative in the area and with defendant’s home office to confirm that the store would remain a Walgreen agency.

Plaintiff Milton Avenue Pharmacy, is a 4,000 square foot drugstore also located in *157 Janesville. Dennis Dawiedczyk purchased the store in June, 1973, when it was a Walgreen agency. As part of the purchase price, Dawiedczyk paid $10,000 for good will, despite the fact that the store had been losing money.

Plaintiff East Troy Drugs, is a 5000 square foot drugstore located in East Troy, Wisconsin, a town of 2,385. John Rade-macher bought the drug store in 1970 when it was a Rexall agency. In 1976 Rade-macher moved to a larger store in a shopping center strip mall and signed a retailer’s agreement with defendant.

Plaintiff Lake Mills Pharmacy, Inc. is a 1700 square foot drugstore located in Lake Mills, a town of 3,670. Kent Kautzer purchased the store in 1975, when it was an independent store. Kautzer executed a dealership agreement with defendant in November, 1976.

Plaintiff Monticello Pharmacy is a 2300 square foot drugstore located in Monticello, a town of 1,021, about 25 miles away from Madison. Joseph Jameson bought it in February, 1979, three to four months after the store had first opened. Jameson executed a dealership agreement with defendant in June, 1977.

Plaintiff Delafield Pharmacy Walgreen Agency, is a 1700 square foot drugstore located in Delafield, a town of 4,083, on the outskirts of the Milwaukee metropolitan area. Philip Lutgen'purchased the store in 1974 when it was a Walgreen agency, paying $10,000 for good will.

Plaintiff Kunkel Pharmacy, Inc. is a 4000 square foot drugstore located in Elkhorn, a town of 4,605. It was purchased as a Walgreen agency by Donald Kunkel in August, 1968. It has been remodeled twice since 1968.

Plaintiff Langmack’s Drugs, is a 5000 square foot drugstore located in Beaver Dam, a city of 14,100. It was purchased as a Walgreen agency store in 1963 by Carl Johnson.

Plaintiff Monona Drive Walgreen Agency, is a 3000 square foot drugstore located in Monona, a town of 8,809, bordering Madison. It was purchased as an independent store by Dennis Dawiedczyk in 1978. Daw-iedczyk signed a retailer’s agreement with defendant in October, 1978.

Plaintiff Busse Pharmacy, Inc. is a 5000 square foot drugstore located in Water-town, a city of 18,100. Busse was purchased as a Walgreen agency by Alfred Shumaker in 1978. In 1976, when Shumaker was a part owner, the store was remodeled and doubled in size.

Plaintiff Willis Drug, is a 4000 square foot drugstore located in Evansville, a town of 7,835. The store was established in 1956 by Arnold Willis. It was moved across the street to its present location in 1979, the same year in which plaintiff became a Walgreen agency store. The move enabled the store to expand from 1200 square feet to its present size.

In April of 1980, defendant decided to terminate its entire Agency Division nationwide because of unsatisfactory financial performance. Defendant sent letters to plaintiffs informing them of the decision and advising them that their dealership agreements would be terminated effective October 1, 1980.

Defendant’s Agency Division had serviced its agency stores, including plaintiffs, by assisting their owners with inventory, advertising, promotion, store layout, advertising, and other aspects of drugstore operation. Defendant employed agency representatives who solicited drugstore owners to affiliate with defendant. In 1978, for example, a Walgreen agency representative met with Arnold Willis to encourage him to make the Willis Drug Store in Evansville a Walgreen agency store. In early 1979, Willis and his partner traveled with the agency representative to defendant’s headquarters in Deerfield, Illinois, where they met with Walgreen officials. Defendant’s employees provided Willis with plans and blueprints for remodeling the newly-acquired building to make it look like the prototypical Walgreen drugstore and they took him and his partner to two Walgreen stores in the Chicago area to show them the newest Walgreen look and layout. De *158 fendant projected plaintiffs first year sales in the new building as $390,000, second year sales as $475,000, and third year sales as $550,000. In fact, plaintiffs first year sales (for the year ending June 30, 1980) were $382,000, its second year sales were $443,000 (for the year ending June 30, 1981), and its third year sales (for the year ending June 30, 1982) were $471,000.

Under the dealership agreements plaintiffs had with defendant they were able to purchase merchandise from defendant and to designate their stores as Walgreen agencies. The agreements did not require plaintiffs to make an initial payment of a fee to defendant in order to become Walgreen agents. Plaintiffs paid money to defendant only as payment for merchandise or advertising materials which plaintiffs chose to purchase from defendant. The dealership agreements provided for nonexclusive territorial arrangements with defendant, which permitted the existence of Walgreen company-owned stores and other Walgreen agents in plaintiffs’ trading areas.

Although the dealership agreements required plaintiffs to purchase various minimum annual amounts from defendant, plaintiffs did not purchase such minimum annual amounts, and defendant made no effort to enforce the minimum purchase requirements. The following chart shows the percentage of their total cost of purchases represented by the purchases plaintiffs made from defendant from 1975 to September, 1980:

1975 1976 1977 1978 1979 1980

Kealey 11.1 ($34,774) 10.3 ($31,086) 9.4 ($29,878) 9.4 ($28,446) 8.8 ($29,875) ($8,697)

Milton Ave 9.8 ($22,213) 7.9 ($21,573) 7.6 ($24,921) 7.3 ($25,920) 10.1 ($32,891) ($6,090)

East Troy 4.6 ($8,662) 5.4 ($12,973) 6.3 ($19,207) 9.9 ($31,776) ($6,838)

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607 F. Supp. 155, Counsel Stack Legal Research, https://law.counselstack.com/opinion/kealey-pharmacy-home-care-service-inc-v-walgreen-co-wiwd-1984.