of like grade and quality, a practice which violated the Act. While this blanket assertion fails to identify the commodities involved or state that the effect of plaintiff's acts was to lessen competition or injure defendant, it does sufficiently apprise plaintiff of its alleged improper conduct. It is difficult to see how expanded pleadings would substantially add to the notice provided by the counterclaim.
Accordingly, plaintiff's motion to dismiss the Section 2(e) action for failure to state a claim is granted, but defendant may pursue its cause of action under Section 2(a)
3. Defendant's Standing to Maintain Sherman and Clayton Act Violations by Virtue of the Tying Arrangement
Count III of defendant's counterclaim charges that plaintiff required the purchase of certain flooring components by those who wished to purchase the flooring itself. Defendant contends that this practice amounted to an illegal tying arrangement in violation of Section 3 of the Clayton Act, 15 U.S.C. § 14, and Section 1 of the Sherman Act, 15 U.S.C. § 1.
Plaintiff asserts, however, that Count III should be dismissed because Federal has no standing to bring it. In support of this position, Robbins asserts that a customer of a seller who indulges in a tying arrangement of the sort pleaded cannot raise the issue of an illegal tie-in, because he is only a customer and not a competitor.
Robbins also argues that Federal has failed to demonstrate the existence of a conspiracy or combination by two independent business entities, thus making Section 1 of the Sherman Act inapplicable. However, in making these arguments, plaintiff has ignored the great weight of authority holding to the contrary, and for this reason, I deny its motion to dismiss Count III of the counterclaim.
Briefly, a tying arrangement is "an agreement by a party to sell one product but only on the condition that the buyer also purchases a different (or tied) product, or at least agrees that he will not purchase that product from any other supplier." Northern Pacific Railway Co. v. United States, 356 U.S. 1, 5-6, 78 S. Ct. 514, 518, 2 L. Ed. 2d 545 (1958). The practice is made illegal by Section 3 of the Clayton Act if the product is a commodity, Tire Sales Corp. v. Cities Service Oil Corp., 410 F. Supp. 1222 (N.D. Ill. 1976); otherwise, it is a violation of Section 1 of the Sherman Act. Fortner Enterprises, Inc. v. United States Steel Corp., 394 U.S. 495, 89 S. Ct. 1252, 22 L. Ed. 2d 495 (1969); Higbie v. Kopy-Kat, Inc., 391 F. Supp. 808 (E.D. Pa. 1975).
Tying arrangements are looked upon with such disfavor that, if certain elements are shown, they 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, supra, 356 U.S. at 5, 78 S. Ct. at 518; Tire Sales Corp., supra, 410 F. Supp. at 1227. First, there must be in fact a tying arrangement. Second, the seller must possess sufficient economic power with respect to the tying product to restrain free competition appreciably for the tied product. Third, a substantial amount of commerce in the tied product must be restrained. In less demanding Clayton Act cases, plaintiff must only demonstrate the existence of a tying arrangement and either of the second or third elements to make out a violation. To establish a violation under the more stringent non-commodity Sherman Act, all three elements must be present. Times-Picayune Publishing Co. v. United States, 345 U.S. 594, 609-10, 73 S. Ct. 872, 881, 97 L. Ed. 1277 (1953).
Section 4 of the Clayton Act
authorizes suit by a private party for injuries sustained as a consequence of an antitrust violation if two criteria are satisfied. First, the party must show that it has suffered injury to "business or property," which has been defined by the Supreme Court as referring to "commercial interests or enterprises." Hawaii v. Standard Oil Co., 405 U.S. 251, 264, 92 S. Ct. 885, 892, 31 L. Ed. 2d 184 (1972). Second, the party must demonstrate that its injuries were incurred "by reason of" the other party's illegal activities. As was held in Hawaii, supra, 405 U.S. 263 n. 14, this does not mean that every party who can establish some remote connection to the violation has standing. The Third Circuit has confined treble damage relief "to those individuals whose protection is the fundamental purpose of the antitrust laws." Cromar Co. v. Nuclear Materials & Equip. Corp., 543 F.2d 501, 505 (3d Cir. 1976), quoting In re Multidistrict Vehicle Air Pollution M.D.L. No. 31, 481 F.2d 122, 125 (9th Cir.), cert. denied sub nom. Morgan v. Automobile Mfgrs. Assn., 414 U.S. 1045, 94 S. Ct. 551, 38 L. Ed. 2d 336 (1973). The court did not attempt to construct an all-encompassing test; it suggested instead that each case be analyzed on its particular facts. Cromar, supra, 543 F.2d at 506.
Here, Federal has sufficiently alleged the monopolistic position, market dominance, economic power and restraint on free competition to which the cases
refer. Although there is no definite statement which asserts the effect upon commerce resulting from Robbins' activities, under a liberal reading of the counterclaim, Radovich v. National Football League, 352 U.S. 445, 453, 77 S. Ct. 390, 395, 1 L. Ed. 2d 456 (1957), Federal has set forth that a not insubstantial amount of interstate commerce was involved. Federal has adequately averred that it was coerced by Robbins into buying undesired components, that it suffered injury to its business as a result, and that this injury was directly related to Robbins' tying arrangement. In short, defendant has alleged facts which would describe an illegal tying arrangement, the ability of Robbins to require purchase of a tied product, and adverse competitive consequences that resulted therefrom. Therefore, defendant has standing to maintain an antitrust action and, in particular, its causes of action under Section 3 of the Clayton Act and Section 1 of the Sherman Act.
4. Federal's Motion for Class Action Determination
In Count III, Federal seeks to represent all present and former Robbins' distributors and obtain relief for them from Robbins' antitrust violations. Robbins challenges Federal's motion for class action determination by arguing that Federal is particularly unsuited to be the class representative. For support, plaintiff alleges that Federal's financial position severely restricts its ability to represent adequately the purported class,
charges that the counterclaim is motivated solely by revenge, and avers that Federal, as a nondistributor, has interests in conflict with and antagonistic toward the interests of those class members currently operating under a distributor agreement with Robbins. I find this last point valid and sufficient to bar class certification.
To be maintainable as a class action, a suit must meet all of the mandatory requirements of Rule 23(a) and, in addition, fall within one of the Rule 23(b) subsections. Defendant, as movant on the class action motion, bears the burden of demonstrating the propriety of class action treatment. Chevalier v. Baird Savings Assoc., 72 F.R.D. 140, 144 (E.D. Pa. 1976); Chestnut Fleet Rentals, Inc. v. Hertz Corp., 72 F.R.D. 541, 543 (E.D. Pa. 1976). Federal asserts that the Rule 23(a) requirements have been met and that the action is maintainable under subsection 23(b)(3).
The absence of conflicting interests between the representative party and the proposed class members is essential for class action certification under the requirement of Rule 23(a)(4). This rule requires the representative party to protect the interests of the class fairly and adequately. It envisions a plaintiff who will vigorously prosecute the action without bartering away or compromising the case for selfish reasons, Collins v. Signetics Corp., 443 F. Supp. 552 (E.D. Pa., 1976), slip op. at 2-3, and one who will have no interests which may be antagonistic to those of the person or persons he purports to represent. William Penn Man. Corp. v. Provident Fund for Income, Inc., 68 F.R.D. 456 (E.D. Pa. 1975).
My learned colleague, Judge VanArtsdalen, recently had occasion in Aamco Automatic Transmissions, Inc. v. Tayloe, 67 F.R.D. 440 (1975), to address the issue of whether a former franchisee may properly represent a class consisting of both former and present franchisees and his conclusion that such representation could not be permitted is most persuasive. While pointing out that each case must be judged on its own facts, Judge VanArtsdalen found that recent decisions
dealing with this question had uniformly refused to allow the non-franchisee to maintain the action for an all-inclusive class.
67 F.R.D. at 445-46.
It is evident, as plaintiff argues, that Federal's interests here conflict with those whom it wishes to represent. First, current franchisees would be concerned about the continued financial health of their franchisor and would not seek a large monetary recovery while Federal, no longer dependent on Robbins' products, would strive for the maximum monetary award without regard to the possible effect such an award could have on the Robbins' franchise system. Second, Robbins contends that Federal's trial strategy as a non-franchisee would conflict with the strategy most desirable for the franchisees. For example, speed would favor the dealers because they would desire an immediate contract adjustment and continuous business dealings with their manufacturer. But delay would favor Federal, because the sooner the case came to an end, the sooner it would have to satisfy the $76,000. debt to Robbins. Finally, there is the possibility that Federal could settle this debt -- despite the stipulation that Robbins is entitled to judgment in that amount -- in return for a premature termination of the antitrust action and thereby secure relief having no benefit to the remainder of the class. These conflicting interests preclude any finding that Federal would protect the interests of all members of the proposed class as required by Rule 23(a)(4).
Therefore, defendant is not a proper class representative and it may not maintain Count III as a class action.
5. Federal's Motion to Stay Execution of Judgment
Although Federal stipulated to the entry of partial summary judgment, see note 1, supra, it also represented that its financial position prevented immediate satisfaction of the judgment and that any execution on the debt would force its business into liquidation. Following its failure to secure a bond which would have maintained the status quo and protected Robbins' position as a creditor, Federal filed a motion to stay execution under Fed. R. Civ. P. 62(h) until its counterclaim has been resolved.
A motion for a stay of execution under Rule 62(h) is directed to the discretion of the court.
. . . [The] power to stay proceedings is incidental to the power inherent in every court to control the disposition of the causes on its docket with economy of time and effort for itself, for counsel, and for litigants. How this can best be done calls for the exercise of judgment, which must weigh competing interests and maintain an even balance. Landis v. North American Co., 299 U.S. 248, 255-56, 57 S. Ct. 163, 166, 81 L. Ed. 153 (1936) (Cardozo, J.).
"Among these competing interests are the possible damage which may result from the granting of a stay, the hardship or inequity which a party may suffer in being required to go forward, and the orderly course of justice measured in terms of the simplifying or complicating of issues, proof, and questions of law which could be expected to result from a stay." Bailey v. United States, 415 F. Supp. 1305, 1315 n. 33 (D. N.J. 1976), quoting CMAX, Inc. v. Hall, 300 F.2d 265, 268 (9th Cir. 1962).