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NOVAK v. GE CORP.

September 29, 1967

Stanley Novak, d/b/a Supreme Tire Service
v.
General Electric Corp. and Union Carbide Corp.


Higginbotham, District Judge.


The opinion of the court was delivered by: HIGGINBOTHAM

 Nevertheless, I believe that the questions presented by the motions, particularly insofar as their disposition will affect the conduct of this litigation, warrant full discussion and explication. This opinion is intended to provide the explanation of the reasons for and the effect of the above mentioned order.

 I

 Statement of the Case

 This case is before me on the motions of both defendants, General Electric Corporation (hereafter referred to as "G.E."), and Union Carbide Corporation (hereafter referred to as "Carbide"), for partial summary judgment based on the asserted applicability of a release executed by plaintiff, Novak, for the benefit of Carbide in 1964. Jurisdiction is conferred on this Court by 28 U.S.C.A. § 1331, *fn1" because the claims asserted by the plaintiff arise under the federal antitrust laws - 15 U.S.C.A. §§ 13(a), (b), (c), (e), (f), 15, 22, 26 *fn2" and 45. *fn3"

 II

 Factual Background

 In June 1962, Stanley Novak and his then partner, Walter Svihla, by their attorney, David Novack of Camden, New Jersey, commenced an action against Carbide in the United States District Court for the District of New Jersey, *fn4" alleging that Carbide had violated the Robinson-Patman Act by selling "Prestone" brand anti-freeze at different prices to certain competitors from that at which it would sell to plaintiffs. *fn5" Carbide defended by asserting cost justification for any such differences. The case was called for trial on November 12, 1963. That afternoon, the parties engaged in further settlement negotiations which resulted in a tentative agreement that Carbide would pay plaintiffs $5,000 in return for which plaintiffs would agree to a dismissal of their suit with prejudice and would execute a release for the benefit of Carbide. On November 14, 1963, Carbide's local counsel, Joseph Kenney, Esquire, sent to plaintiffs' attorney a draft of a release for his approval and the signature of plaintiffs. A copy was forwarded to plaintiff, Novak, late in November. At the insistence of plaintiffs' counsel, the draft was changed so that the $5,000 would not appear to be paid as "counsel fees", and on December 19, 1966 was returned to plaintiffs' attorney. He forwarded it to plaintiff Novak shortly thereafter. It was signed and verified on January 13, 1964. *fn6" Payment was made shortly thereafter, and a judgment was entered dismissing the action "with prejudice".

 Thereafter, on September 24, 1965, Stanley Novak filed a complaint in this Court commencing this action alleging price discrimination by both G.E. and Carbide in the sale of miniature and sealed beam lamps in the automotive aftermarket in violation of the Clayton Robinson-Patman and Federal Trade Commission Acts.

 Both G.E. and Carbide have moved for summary judgment, asserting that the release precluded this suit. In support of this motion, Carbide has submitted several affidavits and the deposition of plaintiff. G.E., while not a party to the earlier suit, nor mentioned in the release, claims that since its relation to Carbide, under plaintiff's theory of the wrong, would be that of either principal to agent or joint tortfeasor, it, too, is protected by the release. Both petitioners also assert that since they are, in fact, in the relationship of principal and agent, insofar as the marketing of automotive lamps is concerned, G.E. is not required by the Act to offer those lamps to others at the same prices paid by Carbide.

 III

 Discussion

 A. Applicable Rule for Decision

 At the threshold we are met with a difficult problem. "Federal law is generally interstitial in its nature. It rarely occupies a legal field completely, totally excluding all participation by the legal systems of the states. . . . Federal legislation on the whole, has been conceived and drafted on an ad hoc basis to accomplish limited objectives. It builds upon legal relationships established by the states, altering or supplanting them only so far as necessary for the special purpose. . . ." *fn7"

 The antitrust statutes themselves provide no rule for interpreting releases of antitrust claims as to either what claims or what parties are released. Yet, as petitioners urge, since the issue involves the alleged release of a federally created right, it is a "federal question" and one which the federal courts must be competent to answer without regard to state law. *fn8" Thus, Erie R.R. Co. v. Tompkins, 304 U.S. 64, 58 S. Ct. 817, 82 L. Ed. 1188 (1938) Klaxon v. Stentor, 313 U.S. 487, 61 S. Ct. 1020, 85 L. Ed. 1477 (1941), and the cases which followed them, holding that a federal district court in a suit based on diversity of citizenship jurisdiction must apply the same rules for decision as would a state court in that state, are inapplicable.

 On the other hand, federal courts are not bound to create a new rule for decision of every aspect of every "federal question". To the contrary, they should consider the problem, as Congress must have done when it enacted the relevant legislation, in the light of the existing body of state law. Indeed they may even choose to apply the state rule directly. Reconstruction Finance Corporation v. Beaver County, 328 U.S. 204, 66 S. Ct. 992, 90 L. Ed. 1172 (1946), cf. United States v. Yazell, 382 U.S. 341, 86 S. Ct. 500, 15 L. Ed. 2d 404 (1966). The factors to be considered in making this choice are similar to those which determine knotty issues of statutory construction when legislative history is unhelpful:

 1. The requirement - if any - of the federal program for a single rule for decision to be applied ...


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