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ALLIED ELEC. SUPPLY CO. v. MOTOROLA

December 28, 1973

Allied Electric Supply Co.
v.
Motorola, Inc., Borg-Warner Acceptance Corp. and Three Rivers Tempair, Inc.


Knox, District Judge


The opinion of the court was delivered by: KNOX

KNOX, District Judge:

 This is an antitrust action brought by Allied Electric Supply Company (Allied Electric) which seeks treble damages against Motorola, Inc. (Motorola), Borg-Warner Acceptance Corporation (BWAC), and Three Rivers Tempair, Inc. (Three Rivers). Presently before the court are motions by each of the three defendants to dismiss under Rule 12(b) (6) Counts I and II of the plaintiff's amended complaint. These counts allege violations of Sections I and II of the Sherman Act, 15 U.S.C. §§ 1 and 2. The remaining four counts of the complaint, also grounded on the antitrust laws, involve defendant Motorola only and are not relevant for consideration at this time.

 Plaintiff alleges the following facts. From June 6, 1963 until February 28, 1973, the plaintiff had been a duly authorized Motorola distributor. As such, the plaintiff had purchased from Motorola radios, televisions, phonographs and other consumer products which plaintiff then sold to various independent and chain retail outlets. The defendant BWAC provided floor financing for plaintiff's customers from the time plaintiff became a Motorola distributor through December of 1970 when plaintiff terminated its relationship with BWAC.

 On February 28, 1973, Motorola cancelled plaintiff's franchise and appointed the defendant Three Rivers as the new Motorola distributor, with BWAC to provide floor financing to Three Rivers' customers. Plaintiff alleges a conspiracy by the three defendants to eliminate plaintiff as a Motorola distributor. Plaintiff alleges that BWAC, by conspiring with Motorola, has monopolized or attempted to monopolize the floor financing of retail stores that sell Motorola products, and that the elimination of plaintiff as a Motorola distributor is part of that conspiracy.

 Count I charges that the facts alleged violate Section I of the Sherman Act, 15 U.S.C. Section 1; Count II, grounded on the same facts, charges a violation of Section II of the same Act.

 In ruling on this motion for judgment on the pleadings, we must take the material allegations to be true. Doubts will be resolved in favor of upholding the pleading. Knuth v. Erie-Crawford Dairy Co-operative Association, 395 F.2d 420 (3d Cir. 1968). The Supreme Court has indicated that we should be extremely liberal in construing antitrust complaints. See Radiant Burners, Inc. v. Peoples Gas, Light & Coke Company, 364 U.S. 656, 81 S. Ct. 365, 5 L. Ed. 2d 358 (1961); Radovich v. National Football League, 352 U.S. 445, 77 S. Ct. 390, 1 L. Ed. 2d 456 (1957); and United States v. Employing Plasterers Association, 347 U.S. 186, 74 S. Ct. 452, 98 L. Ed. 618 (1954). In Employing Plasterers, supra, the court made clear that "whether the charges be called 'allegations of fact ' or 'mere conclusions of the pleader, ' . . . they must be taken into account in deciding whether a claim for relief is stated. " The court further said:

 
"* * * [Where] a bona fide complaint is filed that charges every element necessary to recover, summary dismissal of a civil case for failure to set out evidential facts can seldom be justified. If a party needs more facts, it has a right to call for them under Rule 12(e) of the Federal Rules of Civil Procedure. And any time a claim is frivolous an expensive full dress trial can be avoided by invoking the summary judgment procedure under Rule 56." Above at p. 189, 74 S. Ct. at p. 454, 98 L. Ed. at 623.

 We feel confident that the Supreme Court's attitude toward judgment on the pleadings in antitrust cases has not changed since the decision in Employing Plasterers by looking at the decision involving summary judgment in Fortner Enterprises v. United States Steel Corporation, 394 U.S. 495, 89 S. Ct. 1252, 22 L. Ed. 2d 495 (1969). There, quoting Poller v. Columbia Broadcasting System, 368 U.S. 464, 82 S. Ct. 486, 7 L. Ed. 2d 458 (1962), the court states:

 
"We believe that summary procedures should be used sparingly in complex antitrust litigation where motive and intent play leading roles, the proof is largely in the hands of the alleged conspirators, and hostile witnesses thicken the plot. It is only when the witnesses are present and subject to cross-examination that their credibility and the weight to be given their testimony can be appraised."

 We will deal first with Count I of the complaint, which charges a violation of Section I of the Sherman Act, 15 U.S.C. § 1. That statute prohibits "every contract, combination . . . or conspiracy in restraint or trade or commerce among the several states. . . ."

 The defendants first contend that Motorola has an absolute right to terminate its business dealings with plaintiff, and that the business necessity of making new arrangements for a distributor of Motorola's products does not violate the Sherman Act, whether the new arrangements were entered into before or after terminating the old distributor. Defendants rely on Ark Dental Supply Co. v. Cavitron Corporation, 461 F.2d 1093 (3d Cir. 1972), from which they quote:

 
"We deem the decision of the Ninth Circuit in Joseph E. Seagram & Sons, Inc. v. Hawaiian Oke & Liquors, Ltd., 416 F.2d 71 (C.A. 9, 1969), cert. denied, 396 U.S. 1062, 90 S. Ct. 752, 24 L. Ed. 2d. 755 (1970), to be dispositive of the instant case. In a thorough and well-researched opinion, the court, speaking through Judge Duniway, held that it is indisputable that a single manufacturer or seller can ordinarily stop doing business with A and transfer his business to B and that such a transfer is valid even though B may have solicited the transfer and even though the seller and B may have agreed prior to the seller's termination of A." (Id. at 1094)

 But Ark Dental Supply affirmed a summary judgment. The plaintiff had first been given the opportunity to develop the underlying facts through discovery procedures, to ascertain the intent or motives that might have been present. Ark Dental Supply does not ...


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