OB-GYN ASSOC. OF NEENAH v. Landig

384 N.W.2d 719, 129 Wis. 2d 362
CourtCourt of Appeals of Wisconsin
DecidedFebruary 12, 1986
Docket84-2183
StatusPublished

This text of 384 N.W.2d 719 (OB-GYN ASSOC. OF NEENAH v. Landig) is published on Counsel Stack Legal Research, covering Court of Appeals of Wisconsin primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
OB-GYN ASSOC. OF NEENAH v. Landig, 384 N.W.2d 719, 129 Wis. 2d 362 (Wis. Ct. App. 1986).

Opinion

129 Wis.2d 362 (1986)
384 N.W.2d 719

OBSTETRICAL & GYNECOLOGICAL ASSOCIATES OF NEENAH, S.C., Plaintiff-Respondent,
v.
Vivian LANDIG, Defendant and Third-Party Plaintiff-Appellant,
Fred J. BARTIZAL and Ronald L. Strebel, Third-Party Defendants.

No. 84-2183.

Court of Appeals of Wisconsin.

Oral argument November 19, 1985.
Decided February 12, 1986.

*363 For the defendant and third-party plaintiff-appellant, briefs were submitted by the Eisenberg & Kuehl, S.C. firm of Milwaukee. Oral argument by Steven R. Wiechmann.

For the plaintiff-respondent, a brief was filed by Jeffrey W. Hanes of Remley, Sensenbrenner, Stein, Cummings, Snyder & Hanes, S.C. of Neenah. Oral argument by Jeffrey W. Hanes.

For the Department of Justice, an amicus curiae brief was submitted by Bronson C. La Follette, attorney general, and Kevin J. O'Connor, assistant attorney general. Oral argument by Kevin J. O'Connor.

Before Scott, C.J., Brown, P.J., and Nettesheim, J.

BROWN, P.J.

This case concerns a species of Wisconsin's anti-trust law, sec. 133.05, Stats.—secret rebates. At issue is statutory interpretation. The major question is: Did the legislature intend to outlaw all secret rebates on the basis that they are unreasonably anti-competitive per se? Or, did the legislature intend that secret rebates are unlawful only if complainants *364 prove competitive injury? The trial court found the former to be the case and granted summary judgment for the complainant. We reverse.

The basic facts are as follows: Obstetrical & Gynecological Associates of Neenah, S.C. (OB-GYN) was moving to a newly constructed building and hired Vivian Landig to do the interior decorating. In exchange for Landig's services, she was to receive fifteen percent of the total purchases made in decorating the premises. The agreement also specified that Landig obtain the best possible prices from suppliers.

Landig obtained discounts but did not inform OB-GYN. Instead, she quoted retail prices to OB-GYN. OB-GYN, believing the quoted prices to be the best price available, wrote checks in the amounts requested; Landig delivered the checks to the suppliers who, in turn, gave Landig rebates for the discounted sums. Landig did not pass these rebates on to OB-GYN.

When Ob-GYN discovered this practice, it refused to pay Landig's final bill and sued her under various theories. Among them was an allegation that subsets. 133.05(1) and (2), Stats., were violated. The trial court entered summary judgment on this ground, the effect of which was to allow for trebling of damages and payment of attorney fees pursuant to sec. 133.18(1), Stats. Landing appeals the summary judgment. A brief discusion of preliminary concepts is necessary before discussing sec. 133.05 with particularity.

The guiding principle of ch. 133, Stats., is free competition. See sec. 133.01, Stats. Although in truth every commercial agreement restrains competition, Grams v. Boss, 97 Wis.2d 332, 348, 294 N.W.2d 473, 481 (1980), to read anti-trust law as prohibiting all agreements restraining trade would stifle commerce. Hansen, Spotting *365 Unreasonable Restraints of Trade Without Difficulty, 55 Wis. Bar Bull., June 1982, at 22. For example, if Adams sells a car to Smith, the car cannot be sold to Jones. Id. Still, the transaction is for the greater good. Courts, therefore, have ruled that the commercial agreement must, in most cases, unreasonably restrain competition before they will vacate a free market transaction. See Grams at 348, 294 N.W.2d at 481.

It is expensive, however, to prove that a restraint is unreasonable. Hansen at 22. As stated by one commentator:

One must identify the market, show how the restraint adversely affects it, and prove that the benefits of the restraint do not justify the resulting encroachment on competition. Trials last weeks, months and sometimes years. And then there is discovery.
Economics, experience and common sense disclose that some practices nearly always restrain trade without compensating benefit.

Id. In recognition of this difficulty, courts and legislatures have fashioned what has been termed as per se treatment. This is defined by the United States Supreme Court as follows:

[T]here are certain agreements or practices which because of their pernicious effect on competition and lack of any redeeming virtue are conclusively presumed to be unreasonable and therefore illegal without elaborate inquiry as to the precise harm they have caused or the business excuse for their use. Northern Pacific Railway Co. v. United States, 356 U.S. 1, 5 (1958).

The Wisconsin legislature apparently has enacted anti-trust laws containing a per se rule. Section *366 100.201(2)(a)1., Stats., for example, seems to forbid certain rebates in the dairy industry without regard to proof of an adverse effect upon competitors or competition generally. Also, sec. 100.15, Stats., concerning trading stamps, and sec. 218.01(9), Stats., dealing with auto dealerships, appear to have undergone per se treatment. The question is whether the Wisconsin legislature has done it here. With this discussion of preliminary concepts in place, we move on to the interpretation of the statute.

Because interpretation of the statute is a question of law, we pay no deference to the trial court. Hainz v. Shopko Stores, Inc., 121 Wis.2d 168, 172, 359 N.W.2d 397, 400 (Ct. App. 1984). We interpret the statutes ab initio. Id.

Section 133.05(1), Stats., states:

The secret payment or allowance of rebates, refunds, commissions or unearned discounts, whether in the form of money or otherwise, or the secret extension to certain purchasers of special services or privileges not extended to all purchasers purchasing upon like terms and conditions, such payment, allowance or extension injuring or tending to injure a competitor or destroying or tending to destroy competition, is an unfair trade practice and is prohibited. [Emphasis added.]

OB-GYN interprets the statute to mean that competitive injury is "not a required element of the prohibited unfair trade practice but a legislative finding as to the consequences of secret rebates." It focuses upon that part of the statute emphasized above and asserts that we must read this as a legislative conclusion that all secret rebates have a pernicious effect upon competition. *367 OB-GYN claims that the legislature made this "finding" in light of its belief that proof of anti-competitive effect would be too costly and too difficult to meet.

There is nothing in the language of the statute explicitly stating that such is the legislature's will. Nor is there any authority cited by OB-GYN for this proposition. Yet, just because OB-GYN's interpretation is novel does not make it meritless. Upon its face, the statute is unclear as to whether per se treatment has been afforded. The statute can reasonably be interpreted either way.

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Related

Northern Pacific Railway Co. v. United States
356 U.S. 1 (Supreme Court, 1958)
Karseal Corporation v. Richfield Oil Corporation
221 F.2d 358 (Ninth Circuit, 1955)
Hainz v. Shopko Stores, Inc.
359 N.W.2d 397 (Court of Appeals of Wisconsin, 1984)
Wisconsin Bankers Ass'n v. Mutual Savings & Loan Ass'n
291 N.W.2d 869 (Wisconsin Supreme Court, 1980)
Grams v. Boss
294 N.W.2d 473 (Wisconsin Supreme Court, 1980)
Roux Laboratories, Inc. v. Beauty Franchises, Inc.
210 N.W.2d 441 (Wisconsin Supreme Court, 1973)
Chapiewsky v. G. Heileman Brewing Company
297 F. Supp. 33 (W.D. Wisconsin, 1968)
Obstetrical & Gynecological Associates of Neenah, S.C. v. Landig
384 N.W.2d 719 (Court of Appeals of Wisconsin, 1986)
Texas Gulf Sulphur Co. v. J. R. Simplot Co.
418 F.2d 793 (Ninth Circuit, 1969)

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Bluebook (online)
384 N.W.2d 719, 129 Wis. 2d 362, Counsel Stack Legal Research, https://law.counselstack.com/opinion/ob-gyn-assoc-of-neenah-v-landig-wisctapp-1986.