The opinion of the court was delivered by: Marovitz, District Judge.
Motion of defendants for summary judgment and/or to dismiss.
Motion of defendants for summary judgment on its counterclaims.
This is a six count civil anti-trust action brought by three
"exclusive franchisees" against their supplier, a manufacturer of
automobile seat covers and related accessories. It is alleged
that beginning in 1958, and ending in 1961, the defendant entered
into a series of franchise agreements with dealers around the
country, including the instant plaintiffs, under the terms of
which, said franchisees were licensed to use the trade name
"Protecto," and were granted exclusive dealerships in specified
territories. In consideration of such grants, it is alleged, the
dealers agreed not to sell, use, install, etc. any other product
of any other firm without the written consent of the defendant.
In Count I, plaintiff Crest charges defendant Ero with (1)
violating Sec. 3 of the Clayton Anti-Trust Act by requiring it to
buy exclusively from Ero; (2) violating Sec. 1 of the Sherman
Anti-Trust Act by allegedly requiring Crest to maintain resale
prices; and (3) violating Sec. 2 of the Clayton Act, as amended
by the Robinson-Patman Act, by allegedly discriminating against
Crest both as to prices and services. In Counts II and III,
plaintiffs Protecto of Michigan and Einhorn adopt and repeat the
In Count IV, plaintiff Crest alleges that pursuant to the
franchise contract, it paid to Ero, for advertising, an amount
equal to 20 per cent of its purchases, and that Ero did not use
said money for the purpose intended. In Counts V and VI, the
other plaintiffs again repeat and adopt the same allegations.
Defendant has filed a series of seven counterclaims, based on
amounts allegedly due Protecto Products Co., a wholly-owned
subsidiary of defendant (counter-plaintiff), under various
subleases, franchise contracts, and guarantees executed by the
plaintiffs and additional parties defendant to the counterclaims.
In Count I, Ero alleges that plaintiff Crest owes Protecto
$5,757.98 for unpaid rent and other expenses under a sublease of
premises located at 6300 North Lincoln Avenue in Chicago.
Judgment is sought against Crest, and one Albert Garfield as
guarantor. In Counts II and III, defendant alleges that plaintiff
Protecto of Michigan, Inc. owes $27,045.10, and $25,500.00
respectively for unpaid rent and other miscellaneous expenses
under subleases of premises located at 1755 Dix Avenue, Lincoln
Park, Michigan, and 14185 Greenfield Road, Detroit, Michigan. In
addition to the named plaintiff-counter-defendant, judgment is
sought against Orville Lefko, George Haar, and Ben Krugel as
Count IV is brought against the same counter-defendants
mentioned in II and III, for $42,403.76, allegedly due for goods
sold and delivered and advertising charges. Counts V, VI, and VII
are brought against plaintiff Einhorn for rent due under
subleases of premises located at 3101 Reading Road and 1684
Central Parkway, Cincinnati, Ohio, and for money allegedly owing
for goods sold and delivered, and for advertising charges.
Judgment is sought for $7,413.50, $30,300, and $15,255.09
Defendant Ero has filed a series of motions for summary
judgment and/or to dismiss the complaint, and for summary
judgment on the counterclaims. Each shall be considered
In that case, we held, as we do here today, that a litigant
cannot be heard to complain of injuries which resulted from
alleged antitrust violations to which it was a voluntary party.
As we stated in Rayco, supra, when considering this in pari
"The treble damage penalties of the Clayton Act are
strong medicine. They are intended primarily for the
use of an aggrieved competitor, whose business has
been injured by an exclusive dealing contract
limiting his outlets. * * * A dealer who voluntarily
enters into an agreement with his supplier in
consideration of other benefits conferred upon him,
lacks the same equitable basis to complain of the
exclusive dealing provision as a foreclosed
competitor of the seller. The logic in this reasoning
is inescapable. If dealers were permitted to bring
treble damage suits at will, there would be a rash of
responses to exclusive dealership offering, followed
by the unwarranted high profit of a Clayton Act
suit." (at p. 599.)
See Pa. Water & Power Co. v. Consolidated Gas Electric Light &
Power Co., (4th Cir., 1953) 209 F.2d 131, cert. den.
347 U.S. 960, 74 S.Ct. 709, 98 L.Ed. 1104 (1954); Northwestern Oil Co. v.
Socony-Vacuum Oil Co., (7th Cir., 1943) 138 F.2d 967, 971, cert.
den. 321 U.S. 792, 64 S.Ct. 790, 88 L.Ed. 1081 (1944); Kershaw v.
Kershaw Mfg. Co., (D.C. Ala., 1962) 209 F. Supp. 447, 454.
The cases cited by plaintiff, Kiefer-Stewart Co. v. Joseph
Seagram and Sons, Inc., 340 U.S. 211, 71 S.Ct. 259, 95 L.Ed. 219
(1951); Trebuhs Realty Co. v. News Syndicate, (D.C.N.Y., 1952)
107 F. Supp. 595; Moore v. Mead Service Co. (10th Cir., 1951)
190 F.2d 540, and others, were all considered by this Court in the
Rayco decision, and distinguished. Each of these cases deal with
the general proposition that the alleged illegal conduct of one
party cannot immunize the other party against liability to those
they injured. However, these holdings, disallowing the in pari
delicto defense were limited to specific situations where the
plaintiff had not violated the antitrust acts in combination with
the defendant. This is the crucial distinction applied in Rayco,
and reapplied today.
While Davidson v. K.C. Star Co. (D.C.Mo., 1962) 202 F. Supp. 613,
619, on which we relied in Rayco, has been subsequently
reversed by the Eighth Circuit Court of Appeals, (Bales v. K.C.
Star Co. (8th Cir., 1964) 336 F.2d 439), it must be noted that
said reversal was based on the fact that the plaintiff was
coerced into entering into the antitrust violations. That
"coercion" argument was considered by this Court in Rayco, with
regard to our discussion of Ring v. Spina, (2d Cir., 1945)
148 F.2d 647, and rejected on the facts before us. Indeed, we might
note the clear distinction made by the 8th Circuit in Bales on
"Of course, if the plaintiffs actually were in pari
delicto with the defendants in the alleged endeavor
of the Star to prevent competition and create a
monopoly for itself in the area, ...