fall far short of those in Peerless and do not allege illegal conduct.
Plaintiffs also contend that defendants violated Section 1 of the Sherman Act which prohibits contracts, combinations, or conspiracies in restraint of trade. However, plaintiffs have not described any conduct by defendants which amounts to such trade restraint. For example, there is no contention that Otis tried to prevent Stokes from selling lift trucks, but merely that the exclusive franchise once held by Stokes was awarded to Keystone. This is not enough. Plaintiffs' allegations are similar to those in Joseph E. Seagram and Sons, Inc. v. Hawaiian Oke and Liquors, Ltd., 416 F.2d 71 (9th Cir. 1969), cert. denied 396 U.S. 1062, 90 S. Ct. 752, 24 L. Ed. 2d 755 (1970), rehearing denied, 397 U.S. 1003, 90 S. Ct. 1113, 25 L. Ed. 2d 415 (1970), and Kirihara v. Bendix Corporation, 306 F. Supp. 72 (D. Hawaii 1969). In these two cases a switching from one exclusive dealer to another was held not to amount to a violation of the antitrust laws despite consequent loss of customers and business to the former distributor.
Moreover, since plaintiffs failed to make out a cause of action under the Clayton Act, they have also failed to do so under the narrower Sherman Act. In Tampa Electric Co. v. Nashville Coal Co., 365 U.S. 320, 335, 81 S. Ct. 623, 632, 5 L. Ed. 2d 580 (1961), the Supreme Court stated, "We need not discuss the respondents' further contention that the contract also violates section 1 and section 2 of the Sherman Act, for if it does not fall within the broader proscription of section 3 of the Clayton Act it follows that it is not forbidden by those of the former."
Count I must be dismissed because plaintiff has not set forth a claim under either Section 3 of the Clayton Act or Section 1 of the Sherman Act.
In Count II of their complaint, plaintiffs charge that Otis violated Section 7 of the Clayton Act by its acquisition of Moto-Truc and is therefore responsible to them for treble damages under Section 4 of the Act. To the facts pleaded in the first count, plaintiffs add the assertions that through its merger with Moto-Truc, Otis obtained one of the four largest manufacturers of narrow aisle lift trucks, a separate line of commerce. It is then averred that one of the purposes and effects of the acquisition was to force Moto-Truc dealers to sell the Baker truck and to cut off those dealers which did not fit into Otis' plans for a consolidated sales program. Had Otis not purchased Moto-Truc, plaintiffs contend that Stokes would have remained as a Moto-Truc dealer.
Section 7 of the Clayton Act, 15 U.S.C. § 18, prohibits corporate acquisition of the stock or assets of another corporation where the effect may be substantially to lessen competition, or to tend to create a monopoly. Section 4 of the Act, 15 U.S.C. § 15, provides that any person who shall be injured in his business or property by reason of anything forbidden in the antitrust laws shall recover treble damages.
The statutory requirement that suits be based on injuries which occur "by reason of" antitrust violations expressly restricts the right to sue for treble damages. There must be sufficient causal connection to establish that the violation was a "material cause" of or a "substantial factor" in the occurrence of damage. There must be harm to a plaintiff whose interests Congress intended to protect. While any antitrust violation disrupts the competitive economy to some extent and creates foreseeable ripples of injury which may be shown to reach individual employees, stockholders, or consumers, not all of these have the requisite standing to sue for treble damages. Consequently, a plaintiff must allege a causative chain to his injury which is direct rather than incidental, or which indicates his business or property was within the target area of the defendant's illegal act: Billy Baxter, Inc. v. Coca-Cola Company, 431 F.2d 183, 187 (2nd Cir. 1970).
Here it is clear that Stokes was not within the ambit of those whom Congress intended to protect by Section 7. Assuming that Otis' acquisition of Moto-Truc did violate this section, it would only do so because of a probable lessening of competition in the manufacture of lift trucks. A competing manufacturer might therefore have the right to bring a private action against Otis. It does not follow that all or any of these plaintiffs have a similar right. The joinder of Moto-Truc and Otis was not a material cause or a substantial factor in the damages which plaintiffs allege. There is no direct relationship between the acquisition and the injury. Rather, it was an incidental matter which the merger may have made possible but which it did not cause. All plaintiffs really allege is that because of the merger, Stokes was replaced by Keystone. This is insufficient to make out a case under Section 7, which is concerned with competition, not competitors: Brown Shoe Company v. United States, 370 U.S. 294, 320, 82 S. Ct. 1502, 1521, 8 L. Ed. 2d 510 (1962).
Although plaintiffs aver the Otis, Moto-Truc merger was illegal, they fail to set forth in what way Section 7 was violated. For example, they do not allege that prior to the merger there was any competition between Otis and Moto-Truc. Quite to the contrary, the complaint makes it clear that before 1967 Otis produced Baker trucks, a counterbalanced type with a capacity to 10,000 pounds and York trucks, a large, counterbalanced machine with a capacity to 50,000 pounds. Moto-Truc, on the other hand, manufactured narrow aisle lift trucks, which the complaint refers to as "a separate line of commerce."
Plaintiffs allege a merger, but not all mergers are illegal. In fact, as it is pointed out in Brown Shoe Company v. United States, supra, the joining of two small companies may promote competition by improving their position in the market place and their ability to sell their products.
There is no allegation that the acquisition of Moto-Truc by Otis lessened competition or tended to create a monopoly. It would hardly follow that because Stokes which sold one line of trucks was replaced by Keystone which sells two lines that fewer lift trucks are available to prospective purchasers. Although plaintiffs complain that one of the effects of the merger was to eliminate certain former Moto-Truc distributors, there is no averment that there are now fewer lift truck dealers or that Stokes has been foreclosed from continuing in this type of business.
Having failed to aver any lessening of competition in the manufacture or sale of lift trucks, any direct injury caused by the Otis, Moto-Truc merger, and any facts to show they were in the target area of the Clayton Act, plaintiffs have failed to state a valid cause of action in Count II.
Although Counts I and II of the complaint must be dismissed for failure to state a claim for which relief can be granted, facts may exist which could support both of these causes of action. Antitrust litigation should not be disposed of without giving plaintiffs a full opportunity to formulate their charges: Radovich v. National Football League, 352 U.S. 445, 77 S. Ct. 390, 1 L. Ed. 2d 456 (1957). Therefore, plaintiffs will be granted twenty (20) days from the day of the filing of the following order to amend their complaint if they so desire. If there is no amendment within that period, the dismissal will be final and with prejudice.