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KEYSTONE FLOOR PRODS. CO. v. BEATTIE MFG. CO.

June 15, 1973

KEYSTONE FLOOR PRODUCTS CO.
v.
The BEATTIE MANUFACTURING CO., et al.


Hannum, District Judge.


The opinion of the court was delivered by: HANNUM

HANNUM, District Judge.

 In this diversity action, plaintiff, Keystone Floor Products Co. (Keystone) seeks injunctive relief and damages alleging that the defendants engaged in the following unlawful conduct: (1) breach of contract by defendant Beattie Manufacturing Co. (Beattie); (2) malicious interference with contract by defendant Beattie; (3) unfair competition by defendant Beattie; and (4) antitrust violations by both defendants. Presently before the Court is plaintiff's motion for a preliminary injunction based upon plaintiff's first three allegations.

 On May 8, 1973, after notice to defendants, a temporary restraining order was issued prohibiting defendants from:

 (1) Inducing or attempting to induce any of plaintiff's customers from purchasing carpet from any other, than plaintiff.

 (2) Inducing and interfering in any manner whatsoever with plaintiff's present or prospective contractual relations with plaintiff's customers.

 (3) Interfering in any manner whatsoever with plaintiff's employees present or past, specifically as to disclosure of plaintiff's confidential information and trade secrets.

 (4) Using, disclosing or attempting to use or disclose for the benefit of themselves or any other person directly or indirectly any confidential information acquired by defendants Levenkron and Wittenberg while in plaintiff's employ. The temporary restraining order was modified during the course of the hearing on plaintiff's application for a preliminary injunction, and at the conclusion of the hearing it was extended, as modified, with Beattie's consent.

 For the reasons set forth herein, the temporary restraining order will be dissolved and plaintiff's motion for a preliminary injunction will be denied.

 Breach of Contract

 Defendant Beattie is engaged in the manufacture and nationwide distribution of carpeting. Beattie sells its brand-name products to approximately 20 to 25 carpet distributors throughout the country and, in some markets, sells its brand-name carpet directly to retail commercial outlets. In 1966 Beattie appointed Keystone as distributor of certain lines of Beattie brand-name carpets in the Philadelphia, Baltimore and Washington, D.C. areas. In 1971, Keystone was also appointed Beattie's distributor in northern New Jersey. Although there was no written agreement between Beattie and Keystone, Beattie did publish a list of "General Terms and Policies for Distributors" in May 1970. Paragraph 15 of this writing provided as follows:

 
"The mill-distributor relationship may be discontinued without cause, provided 60 days notice is given by either party. This practice will be considered as common usage and both parties will be notified where the communication was made as was this by certified mail, return receipt requested."

 The May 1970, statement of general terms and policies also included paragraphs relating to credit terms and claims handling. The Testimony of Richard A. Freed, President of Keystone, and John Beattie, President of Beattie, indicated that policies of credit and claims were subject to negotiation and change. Keystone was formally advised of its sole distribution rights in the area of its distributorship on January 17, 1972 by letter from John A. Beattie. In July 1972, plaintiff moved its place of business to obtain increased warehouse space. Beattie carpet comprised a substantial portion of Keystone's inventory in this new warehouse, although Keystone also distributed carpet manufactured by several other companies.

 On April 25, 1973, Beattie notified Keystone that its distributorship would be discontinued, *fn1" but agreed to continue to supply Keystone for 60 days, or slightly longer if Keystone believed it necessary, on a C.O.D. basis only. Immediately after giving this notice ...


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