of the leasing of general purpose digital computers.
In the instant case, plaintiff contends that, although the record indicates that disposable orthodontic products manufacturers marketed other products through sales to wholesale distributors, Masel was the only manufacturer which marketed facebows in this manner. Indeed, no manufacturer would sell facebows to EDC after the cutoff although they would sell it other products. There is testimony in the record that sales of facebows at wholesale prices created merchandising problems which were not present in direct retail sales.
From the above, a factfinder could infer that the industry recognized a wholesale facebow submarket. Thus, a genuine issue of fact exists as to whether such a market exists and whether Masel had monopoly power in that market.
EDC will not, however, be able to establish a relevant market based on a theory that Masel facebows are so unique that there were no available substitutes. There is no evidence in the record supporting this assertion. First, as plaintiff has conceded in its answers to interrogatories, other manufacturers' facebows are functionally interchangeable with Masel's.
Secondly, EDC's own conduct after Masel cut it off does not support its contention. EDC explored the possibility of obtaining facebows from other manufacturers. If EDC had been able to get them for a wholesale price, it would have purchased the facebows from other manufacturers. The lack of available substitutes for Masel facebows was not due to the functional uniqueness of Masel facebows but rather was due to the refusal of other manufacturers to supply similar facebows at a wholesale price. Thus, there is nothing in this record to support a finding that Masel facebows were so unique that that product constituted a relevant market in and of itself. See, e.g., Edward J. Sweeney & Sons, Inc. v. Texaco, Inc., 637 F.2d 105 (3d Cir., 1980); Mogul v. General Motors Corporation, 391 F. Supp. 1305 (E.D.Pa.1975), aff'd, 527 F.2d 645 (3d Cir. 1976).
Accordingly, although plaintiff will not be able to prove the existence of a market consisting of Masel facebows alone, defendant is not entitled to summary judgment on the element of monopoly power because there is a genuine issue as to the existence of a wholesale facebow market. If plaintiff can establish such a market at trial, there is some evidence that defendant has a sufficient share of that market to support a finding that it has monopoly power.
2) Willful Acquisition or Maintenance of Monopoly Power
Masel also contends that if it had monopoly power in the wholesale market, the record indicates that it did not willfully acquire or maintain that power and therefore it is entitled to summary judgment on the monopolization claims.
This element of the offense of monopolization reflects the fact that the Sherman Act does not prohibit "monopoly in the concrete" but rather requires some type of anti-competitive conduct. Standard Oil of New Jersey v. United States, 221 U.S. 1, 62, 31 S. Ct. 502, 516, 55 L. Ed. 619 (1911); Berkey Photo, Inc. v. Eastman Kodak Company, 603 F.2d 263, 273-75 (2d Cir. 1979), cert. denied, 444 U.S. 1093, 100 S. Ct. 1061, 62 L. Ed. 2d 783 (1980).
The courts have held that the willful acquisition element is satisfied by the use of monopoly power in one market to create a monopoly in another market. The rationale being "if monopoly power can be used to begat monopoly, the Act becomes a feeble instrument indeed." United States v. Griffith, 334 U.S. 100, 108, 68 S. Ct. 941, 946, 92 L. Ed. 1236 (1948); Smith Kline Corp. v. Eli Lilly & Co., supra, at 1065.
In dictum, the Griffith court indicated that not only is it a violation of section 2 for a party to use monopoly power to "begat" monopoly but section 2 is also violated when the "power, however lawfully acquired (is used) to foreclose competition, to gain a competitive advantage, or destroy a competitor ...." United States v. Griffith, supra, at 107, 68 S. Ct. at 945. Other courts have accepted this teaching and have held that section 2 is violated when monopoly power in one market is used as a lever in another. See, e.g., Mid-Texas Communications Systems, Inc. v. American Telephone and Telegraph, 615 F.2d 1372, 1386 (5th Cir. 1980); Berkey Photo, Inc. v. Eastman Kodak Company, supra, at 275; Smith Kline Corp. v. Eli Lilly & Co., supra, at 1065.
In the instant case, although EDC does not allege that Masel acquired its purported monopoly power illegally, it alleges that Masel has used that power to gain a competitive advantage in the orthodontic product/instrument manufacturing markets and retail markets.
On the record thus far adduced, there is a genuine issue as to Masel's motivation in effectuating the cutoff. There is evidence indicating that Jacob Masel was unhappy when he learned of EDC's decision to manufacture elastics in competition with Masel. EDC asserts that, in the first instance, Masel attempted to acquire EDC. When that failed, the cutoff followed. EDC contends that the cutoff, therefore, was a direct response to EDC's entry into this market and that the purpose of the cutoff was to eliminate EDC as a competitor in the elastics market. Thus, I cannot find, with the requisite degree of certainty, that Masel's cutoff of EDC was accomplished without anti-competitive motivation. Since summary judgment is especially improper in antitrust cases where questions of motive and intent are present, I must deny defendant's motion for summary judgment at least as to the monopolization claim. See Poller v. Columbia Broadcasting System, Inc., 368 U.S. 464, 473, 82 S. Ct. 486, 491, 7 L. Ed. 2d 458 (1962).
B. Attempted Monopolization
To succeed on a claim of attempted monopolization plaintiff must prove that defendant had (1) a specific intent to monopolize and (2) sufficient market power to come dangerously close to success. Harold Friedman, Inc. v. Kroger Company, 581 F.2d 1068, 1079 (3d Cir. 1978); Coleman Motor Co. v. Chrysler Corp., 525 F.2d 1338, 1348 (3d Cir. 1975).
Although it is not entirely clear from the complaint, plaintiff is seemingly contending that Masel attempted to monopolize three distinct submarkets. The submarkets are the dental product/instrument manufacturing market; the market for the retail sale of dental products/instruments; and the wholesale facebow market.
As to the first two markets mentioned above, plaintiff has failed to come forward with sufficient evidence to preclude the entry of summary judgment against it. The evidence in this record is abundantly clear that Masel had less than a 1% market share in any conceivable product market with the possible exception of the wholesale facebow market. In Harold Friedman, Inc. v. Kroger, supra, at 1080, the Third Circuit held that a supermarket chain, whose market share rose from 9.2% to 15.5% as an alleged result of anti-competitive conduct, did not have the requisite market power to come dangerously close to monopolizing the relevant market. Clearly, Masel, holding less than 1% of any market with the exception of the wholesale facebow market, does not have sufficient market power to come dangerously close to monopolizing these markets.
As indicated in my discussion of monopolization, however, if EDC can establish that a wholesale facebow market exists, then there is a genuine issue of fact as to whether Masel had a sufficient share of that market to have monopoly power. Similarly, there is a genuine issue of fact as to whether Masel had sufficient market power to come dangerously close to success in achieving monopolization. Further, whether or not Masel had the specific intent to monopolize when it cut off EDC presents a material issue of fact.
Accordingly, I must deny defendant's motion for summary judgment on the claim of attempted monopolization at least as to the wholesale facebow market. Plaintiff, however, has failed to establish that a genuine issue of fact exists as to whether Masel had sufficient market power to come dangerously close to succeeding in monopolizing any other market, and defendant's motion for summary judgment will be granted as to those claims.
III. THE BREACH OF CONTRACT CLAIM
Masel contends that it is entitled to summary judgment on the breach of contract claim on the grounds (a) that the contract is not evidenced by a writing sufficient to satisfy the statute of frauds, Pa.Cons.Stat.Ann. tit. 13, § 2301 (Purdon Pamphlet 1980),
and (b) that requirements contracts which fail to state a specific time term are terminable at will by either party. See id., §§ 2306 and 2309. For the reasons hereafter stated, defendant's motion for summary judgment on the breach of contract claim will be granted on the ground that the purported requirements contract does not satisfy the statute of frauds. In light of the resolution of that issue, it is unnecessary to consider the merits of defendant's argument that the contract is terminable at will.
Pennsylvania's version of the Uniform Commercial Code's Statute of Frauds provides in pertinent part:
(a) General rule. Except as otherwise provided in this section a contract for the sale of goods for the price of $ 500 or more is not enforceable by way of action or defense unless there is some writing sufficient to indicate that a contract for sale has been made between the parties and signed by the party against whom enforcement is sought or by his authorized agent or broker. A writing is not insufficient because it omits or incorrectly states a term agreed upon but the contract is not enforceable under this subsection beyond the quantity of goods shown in such writing.
Id. § 2201(a).
The statute of frauds' requirement of a writing is applicable to all contracts for the sale of goods for $ 500 or more, including requirements contracts. See, e.g., Artman v. International Harvester Company, 355 F. Supp. 482, 486 (W.D.Pa.1972); Weilersbacher v. Pittsburgh Brewing Co., 421 Pa. 118, 218 A.2d 806 (1966). The main purpose of the writing required by the statute of frauds is to "afford a basis for believing (sic ) that the offered oral evidence rests on a real transaction." Harry Rubin & Sons v. Consolidated Pipe Company of America, Inc., 396 Pa. 506, 512, 153 A.2d 472 (1959). A writing which satisfies the requirements of the statute is only evidence of an agreement and does not necessarily prove the existence or terms of a contract. Id.
A writing satisfies the statute if it is (1) signed by the party to be charged, (2) evidences a contract for the sale of goods, and (3) specifies a quantity term. 12A Pa.Stat.Ann. § 2-201 (Purdons 1970) (repealed 1980) (Uniform Commercial Code Comment).
See J. White & R. Summers, Uniform Commercial Code § 2-4 at 51 (1972).
In output and requirement contracts the quantity of goods to be delivered under the contract is determined by the good faith output or requirements of the parties. This does not mean, however, that the statute of frauds' requirement of a quantity term is obviated since the inclusion of a quantity term is a mandatory requirement under the Code. See Doral Hosiery Corporation v. Sav-A-Shop, Inc., 377 F. Supp. 387, 388 (E.D.Pa.1974). While the quantity term in requirements contracts need not be numerically stated, there must be some writing which indicates that the quantity to be delivered under the contract is a party's requirements or output. See Cox Caulking & Insulating Co. v. Brockett Distributing Co., 150 Ga. App. 424, 258 S.E.2d 51 (Ga.App.1979); 3 U.C.C. § 2.04 & n.27.2 (Bender) (citing cases).
EDC asserts that the termination letter dated August 10, 1978, the invoices of the individual transactions between the parties and a letter dated November 18, 1974, satisfy the requisite quantity term. While the above documents may indicate that the parties had an ongoing business relationship, they do not, expressly or by implication, reflect that the contract between the parties was for the supply of EDC's requirements of Masel's products.
First, the invoices of the individual sales transactions do not indicate that a requirements contract was entered into. They reflect only the quantity of goods shipped in each transaction. (Plaintiff's Exhibit III, 25(a)). Invoices which solely reflect the terms of individual transactions do not indicate that quantity is to be measured by requirements and, accordingly, do not satisfy the quantity term requirement of the statute of frauds. See e.g., Artman v. International Harvester Company, supra, at 485; Huyler Paper Stock Company v. Information Supplies Corporation, 117 N.J.Super. 353, 362, 284 A.2d 568 (1971).
Similarly the letter signed by EDC on Masel's letterhead dated November 18, 1974, fails to satisfy the statute of frauds. It provides:
Isaac Masel Company is importing a line of dental instruments which they will supply to Eastern Dental Corporation at a very small markup. Isaac Masel Company is advancing a large sum of money for these products, and would like assurance from Eastern Dental Corporation that
A. Eastern Dental Corporation will not contact Masel's supplier or purchase from Masel's supplier for a period of five years.