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BLENKE BROS. MOTORS, INC. v. CHRYSLER CORPORATION

March 30, 1960

BLENKE BROS. MOTORS, INC.
v.
CHRYSLER CORPORATION, CHRYSLER MOTORS CORPORATION.



The opinion of the court was delivered by: LA Buy, District Judge.

The second amended complaint in the above cause seeks recovery against the defendants on three counts.

Count I alleges that defendants combined and conspired to drive plaintiff out of business and failed to act in good faith and in a fair and equitable manner towards plaintiff in performing and complying with the terms and provisions of the franchise of the plaintiff and in threatening to terminate and in terminating plaintiff's franchise for which acts suit is authorized under the Automobile Dealers Suits Against Manufacturers Act, 15 U.S.C.A. § 1221 et seq. Count II alleges a combination and conspiracy by defendants to restrain interstate commerce in the metropolitan area of Chicago, Illinois, and elsewhere and which combination and conspiracy has created a monopoly in retail sales of Dodge and Plymouth Motor vehicles in said area to the plaintiff's injury and are a violation of §§ 1-7, 12, 13, 14 and 15 of Title 15 U.S.C.A. Count III alleges a common law action for breach of the franchise contract between the parties and which was to be performed in accordance with certain customs and usages which prevailed in the automobile trade.

Prior to the filing of said second amended complaint, which added the claims under Count II and Count III, plaintiff had propounded extensive interrogatories to certain of which the defendants have objected. Rulings on said interrogatories have been deferred because of the defendants' pending motions directed to the second amended complaint.

The briefs of the parties on defendants' motion to strike certain allegations contained in Count I of the second amended complaint are directed principally to the nature of essential allegations respecting defendant's alleged acts toward the plaintiff; that is, whether the acts as alleged are within the scope of the Automobile Dealers Act. The motion is directed to Paragraph 38 of the complaint which sets forth thirty-six acts of the defendants which not only gave raise to the claim under Count I, but also to those alleged in Count II and Count III.

Both litigants have comprehensively and exhaustively set forth the history preceding the final passage of the Automobile Dealers Act. The gravamen of the dispute between them exists in the application of the definition of good faith set forth therein to the plaintiff's allegations of what the defendants did to cause the plaintiff's alleged injury. The statute defines good faith as follows:

    "§ 1221. Definitions. As used in this chapter
  — * * *
    "(e) The term `good faith' shall mean the duty of
  each party to any franchise, and all officers,
  employees, or agents thereof to act in a fair and
  equitable manner toward each other so as to guarantee
  the one party freedom from coercion, intimidation, or
  threats of coercion or intimidation from the other
  party: Provided, That recommendation, endorsement,
  exposition, persuasion, urging or argument shall not
  be deemed to constitute a lack of good faith."

defendants challenge plaintiff's theory that a claim arises when the manufacturer has failed to act in a "fair and equitable" manner; it is urged that more than unfairness and inequity is required to evoke the remedy provided by the act; that

    "The term `fair and equitable' as used in the bill
  is qualified by the term `so as to guarantee the one
  party freedom from coercion, intimidation, or threats
  of coercion or intimidation from the other party.' In
  each case arising under this bill, good faith must be
  determined in the context of coercion or intimidation
  or threats of coercion or intimidation." 3 U.S.Code,
  Cong. and Admin.News, 1956, p. 4603.

Defendants urge the deficiency to meet this standard of subparagraphs (a), (c), (e), (f), (i), (j), (k), (m), (n), (o), (p) and (q), (r) and (s), (t) and (u), (v), (w), (aa), (cc), (dd), (ff), (gg), (hh), and (jj). Those subparagraphs which are prefaced by the word "compel", such as (b), (d), (g), (h), (l), (x), (y), (z), and (ee), defendants concede, for the purposes of the motion, that these allegations liberally construed "might be held to allege grounds for recovery under the act if plaintiff can prove damages resulting from such acts".

It appears that wherever plaintiff has used the word "compel" defendant concedes that it connotes coercion and intimidation; wherever plaintiff uses the phrases "failure", "refusal", "delay", "in violation of contract", and "favoring", defendants challenge their efficacy to describe or constitute coercion or intimidation as contemplated by the Act.

Compulsion is synonymous with coercion and means in general some actual or threatened exercise of power possessed by the parties exercising it; but coercion can be accomplished by indirect means, as coercion which is implied from acts. Thus, coercion and intimidation is not necessarily limited to exercise of positive force or direct threats, but may result from any pressure which puts one in actual fear of loss of property or injury to business.

The court cannot categorize the questioned allegations as failing to equate a standard of coercion and intimidation. By the statutory definition alone, unfair and inequitable conduct may be of such nature as to constitute coercion and intimidation. A motion to strike should be sustained only where the allegations bear no possible relation to the claim asserted, and should be denied when there is doubt as to whether they raise an issue under any contingency. For these reasons, the court is of the opinion that defendant's motion to strike certain allegations contained in Paragraph 38 of the complaint should be denied.

The court has considered defendants' motion to dismiss Count II of the complaint for failure to allege a claim under the anti-trust statutes. No facts, other than those relating to defendants' conduct toward the plaintiff which have been incorporated into Count II, are stated from which it can be determined that the contemplated purpose, tendency and inherent nature or result of the alleged conspiracy and combination was that fewer automobiles moved in interstate commerce or that a monopoly to destroy competition was effected or ...


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