Kealey Pharmacy & Home Care Services, Inc., Plaintiffs- Counterdefendants-Appellees v. Walgreen Company, Defendant-Counterplaintiff-Appellant

761 F.2d 345
Court of Appeals for the Seventh Circuit·Decided June 3, 1985·No. 84-1865·Published·Cited by 48 cases

Opinion

CUMMINGS, Chief Judge.

In September 1980, thirteen independently owned drugstores located in various southern Wisconsin towns sued defendant Walgreen Company, an Illinois corporation which operates company-owned drugstores throughout the United States. Prior to October 1, 1980, it also sold its and others’ drug, beauty aid and household commodity products nationwide through fourteen hundred independently owned drugstores pursuant to a standard “Dealership Agreement.” Plaintiffs sued for injunctive and monetary relief under the Wisconsin Fair Dealership Law (WFDL), Wis.Stats. § 135.-01 et seq., in state court, but the suit was removed by defendant to the Western District of Wisconsin by virtue of diversity jurisdiction (28 U.S.C. § 1332). Paragraph “Fourth, (d)” of the Dealership Agreement with plaintiff Willis Drug provided that “[i]n the event Walgreen determines at any time to discontinue all similar Dealer’s agreements, it may, at its option, terminate all agreements * * * upon a thirty days’ written notice to the Dealer” (App. A5). Similar language appeared in paragraph “Fourth, (c)” of the defendant’s Dealership Agreements with the other plaintiffs (App. A40).

On April 14, 1980, defendant decided to terminate all its Dealership Agreements effective October 1, 1980, on the ground that the dealers were producing an inadequate rate of return. Defendant so notified its fourteen hundred dealers by letter of April 17th. This action prompted the thirteen plaintiffs to sue. Because two of the pharmacies, Bernie’s Walgreen Agency and Genoa City Pharmacy, had executed Dealership Agreements with defendant before the April 1974 effective date of the WFDL, the district court dismissed them from the suit and granted defendant summary judgment with respect to their claims on June 1, 1982. 539 F.Supp. at 1362-1363. This appeal by defendant involves the prevailing remaining eleven drugstores.

*348 In her June 1982 opinion (Kealey Pharmacy & Home Care Service, Inc. v. Walgreen Co. (Kealey I), 539 F.Supp. 1357 (W.D.Wis.1982)), Judge Crabb ruled that the WFDL applied to the parties and permitted Walgreen to terminate dealerships only for good cause, which was defined in Section 135.02 of the statute as:

(a) Failure by a dealer to comply substantially with essential and reasonable requirements imposed upon him by the grantor, or sought to be imposed by the grantor, which requirements are not discriminatory as compared with requirements imposed on other similarly situated dealers either by their terms or in the manner of their enforcement; or
(b) Bad faith by the dealer in carrying out the terms of the dealership.

The court rejected defendant’s argument that the Wisconsin Act permitted these nondiscriminatory, evenhanded and impartial terminations whose adverse impact upon the suing dealers would be much the same. Instead the court ruled that “a Wisconsin court would conclude that the [WFDL] law was intended to, and does, cover nondiscriminatory, across-the-board terminations of dealerships even if those terminations are undertaken because the grantor decides to withdraw from an entire geographic area, or to cease production of the products sold by its dealers, or to change its marketing structure, or for any other business reason.” 539 F.Supp. at 1368.

The defendant’s attack on the constitutionality of the WFDL was also rejected, but the court concluded that since the plaintiffs could be compensated adequately by an award of damages, no injunctive relief would be granted. Plaintiffs were awarded partial summary judgment on the issue of defendant’s liability for damages. 539 F.Supp. at 1371.

The district court handed down its second opinion, Kealey II, in April 1984 after trial to the court on the issue of damages. 1 The eleven drugstore plaintiffs were awarded $431,182 pursuant to the WFDL. Included in this amount were their attorney’s fees of $75,407 and costs of $15,428 which are reimbursable under Section 135.-06 of the statute. 2

Except for a dispute between the parties about preverdict interest, the district court’s judgment is affirmed.

I. Applicability of the Wisconsin Fair Dealership Law

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Kealey Pharmacy & Home Care Services, Inc., Plaintiffs- Counterdefendants-Appellees v. Walgreen Company, Defendant-Counterplaintiff-Appellant, 761 F.2d 345 (7th Cir. 1985).

761 F.2d 345 (Kealey Pharmacy & Home Care Services, Inc., Plaintiffs- Counterdefendants-Appellees v. Walgreen Company, Defendant-Counterplaintiff-Appellant) — published by Counsel Stack Legal Research, free access to 12M+ legal documents.

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