a source other than Sealy except for purchases of private-label
bedding in August, 1963, from Englander, Inc., and in 1964 from
Waynewood, Inc. and Wickline Bedding Company.
Ward in fact purchased nothing from Sealy, Inc., however,
because Sealy, Inc. functions in this context as a national sales
agent for a number of independent manufacturers of bedding who
have agreed to participate in what Sealy calls its "national
accounts" program. Participants in this program designate Sealy
as their agent to solicit the business of, and contract for the
sale of bedding to, national purchasers such as Ward. The
participating manufacturers here agreed to sell bedding to the
Ward stores that was manufactured to specifications dictated by
Sealy only in the territory assigned to them by Sealy and only at
prices specified by Sealy. The participants in the Sealy national
accounts program were the same manufacturers who produce bedding
under the Sealy trademark pursuant to license agreement. Here,
however, no bedding produced under the Sealy trademark is
The complaint, filed March 10, 1965, alleges that Section 1 of
the Sherman Act*fn4 has been violated because all defendants
conspired to prevent firms other than participants in the Sealy
national accounts program "from selling cotton and innerspring
mattresses and matching box springs" to Ward. This conspiracy
allegedly consisted of a "continuing agreement" among the
defendants that only participants in the Sealy program would sell
cotton and innerspring bedding to Ward at prices determined by
Sealy, and that Ward "would not purchase" any such bedding "from
any competitor" of a participant in the Sealy program. It is
further alleged that between October, 1961, and February, 1964,
this conspiracy was implemented by an exclusive dealing agreement
between Ward and Sealy, Inc. in violation of Section 3 of the
The complaint also alleges a violation of Section 2 of the
Sherman Act,*fn6 but it does nothing more than state that Section 2
has been violated. Nowhere does plaintiff discuss monopoly power,
the relevant market, or whether the purpose or effect of the
charged conspiracy was to monopolize or to attempt to monopolize.
All defendants move for summary judgment pursuant to Rule 56 of
the Federal Rules of Civil Procedure. Defendants assert that they
are entitled to judgment as a matter of law because (1) the
statute of limitations bars the action, (2) plaintiff was not in
fact damaged as a result of any loss of the Ward business, (3)
there was no exclusive dealing agreement between Ward and Sealy
or the participants in its national accounts program, and (4)
there was no
"conspiracy" among the defendants to foreclose plaintiff and
others similarly situated from selling bedding to Ward.
The record clearly demonstrates that it is the termination of
plaintiff as a supplier of Ward in compliance with the alleged
exclusive dealing agreement that is the heart of plaintiff's
complaint. The complaint, read most liberally, charges nothing
more, and the proceedings to date show clearly that absent an
unlawful exclusive dealing agreement, plaintiff may not recover.
Of particular import is the fact that during the period the
alleged unlawful exclusive dealing agreement was in effect,
plaintiff states that it stood ready to sell Ward bedding of like
quality and price as that offered to Ward by Sealy.*fn7
I. The Statute of Limitations.
Section 4B of the Clayton Act*fn8 is not to be narrowly construed.
Commonwealth Edison Co. v. Allis-Chalmers Mfg. Co., 210 F. Supp. 557
(N.D.Ill. 1962), aff'd 315 F.2d 558 (7th Cir. 1963). Section
4B of the Clayton Act was designed not to eliminate a cause of
action but rather to create a uniform period throughout the
nation for the commencement of suit. Westinghouse Electric Corp.
v. Pacific Gas & Electric Co., 326 F.2d 575 (9th Cir. 1964).
Plaintiff in a civil antitrust action has four years from the
date on which an act in violation of the antitrust laws
inflicting damage or injury to him occurred to sue the actor, be
it the first or last act committed in violation of the antitrust
laws. Crummer Co. v. DuPont, 223 F.2d 238 (5th Cir. 1955); Norman
Tobacco & Candy Co. v. Gillette Safety Razor Co., 197 F. Supp. 333
(N.D.Ala. 1963), aff'd on other grounds, 295 F.2d 362 (5th Cir.
1961); Charles Rubenstein, Inc. v. Columbia Pictures Corp.,
154 F. Supp. 216 (D.Minn. 1957), aff'd on other grounds, 289 F.2d 418
(8th Cir. 1961); Steiner v. 20th Century Fox Film Corp.,
232 F.2d 190 (9th Cir. 1956); Garelick v. Goerlich's Inc., 323 F.2d 854
(6th Cir. 1963). These cases, and Baldwin v. Loew's Inc.,
312 F.2d 387 (7th Cir. 1963), make it clear that a plaintiff has four
years within which to bring a civil suit for any act causing
injury or damage.
Defendants rely in part on Momand v. Universal Film Exchanges,
Inc., 172 F.2d 37 (1st Cir. 1948), and Baldwin v. Loew's Inc.,
supra. These cases demonstrate only that the statute of
limitations does not commence to run against the instigation of
criminal proceedings until the commission of the last overt act
in compliance with the conspiracy regardless of whether the act
causes injury or damage. Applying these principles here, it is
clear that the statute of limitations commenced to run from the
date on which the plaintiff first sustained injury as the result
of the alleged exclusive dealing agreement.
The record shows beyond any genuine question that plaintiff was
notified in February or early in March, 1961,*fn9 that
Ward intended to terminate plaintiff as a supplier and that this
decision was irrevocable. Plaintiff last sold beds to Ward in
August, 1961. Suit was filed March 10, 1965. With the case in
this posture, defendants insist that it is controlled by Emich
Motors Co. v. General Motors Corp., 229 F.2d 714 (7th Cir. 1956).
This cannot be so, however, because in Emich, unlike here, a
specific contractual relationship between the parties was in
existence, and plaintiff there clearly had the right to bring
suit for unlawful breach of the contract upon receiving notice of
termination. 229 F.2d at 720. Here no contract existed between
the parties, and Ward's notice terminated nothing of legal
significance. That plaintiff received notice more than four years
prior to the commencement of this suit of Ward's decision to
eliminate plaintiff as a supplier at some point in the future
does not bar plaintiff's right to recover. At most, all that is
barred is plaintiff's right to recover damages for injuries
sustained as the actual result of receiving notice, here none.
When plaintiff was notified of Ward's decision not to enter into
any future agreements to purchase bedding from the plaintiff, it
sustained no real injury since Ward at that time and for many
months thereafter continued to purchase bedding from plaintiff.
Plaintiff had no right to maintain suit until it was in fact
injured, and plaintiff sustained no injury as a result of the
alleged exclusive dealing agreement until Ward put that agreement
into effect by actually ceasing to purchase plaintiff's bedding.
This occurred in August, 1961. In light of all these facts,
plaintiff had at least until August, 1965, to commence this
action; since it did so in March, 1965, the suit is not barred by
The Court sua sponte has considered the applicability here of
Section 5(b) of the Clayton Act, 15 U.S.C. § 16(b).*fn10 Section
5(b) of the Act tolls the statute of limitations during the
pendency of any government proceeding as to private rights of
action based in whole or in part upon matters involved in the
government proceeding. There is presently pending before the
Supreme Court a suit by the government challenging the legality
of territorial restrictions found in the licensing agreements
concerning the use of the "Sealy" trademark by Sealy, Inc. and
its licensees, such as Sealy Mattress Company of Chicago. Those
agreements also contained pricing restrictions which were found
by this Court to constitute per se violations of the antitrust
laws. That finding stands unchallenged. The Sealy national
accounts program assailed here operates in much the same fashion.
Were plaintiff allegedly injured by the operation of this
program, Section 5(b) would operate to suspend the statute of
limitations because there is substantial identity in operation
and effect between the Sealy trademark licensing program
and its national accounts program. Leh v. General Petroleum
Corp., 382 U.S. 54, 86 S.Ct. 203, 15 L.Ed.2d 1134 (1965).
Plaintiff's injury, if any, however, stems solely from the fact
that it was allegedly foreclosed from competing for Ward's
business, and that is true only if there was in existence an
exclusive dealing agreement between Ward and Sealy. Nothing in
the complaint alleges that either the territorial allocation or
pricing aspects of the Sealy national accounts program were the
responsible agents of plaintiff's injury. Neither does the
complaint allege, nor does the record demonstrate, that the
anticompetitive effects of these two presumably offensive aspects
of the Sealy national accounts program were the inducing factors
to Ward to enter into the alleged exclusive dealing agreement.
Indeed, plaintiff insists in its complaint and brief and on oral
argument that its prices to Ward equalled those of Sealy. Thus
plaintiff has not been injured by virtue of the pricing aspects
of the Sealy national accounts program because, by its own
admission, it was able to compete with participants in the Sealy
program in the territory where plaintiff operated, the only
territory that is here involved. Thus plaintiff, uninjured by the
Sealy national accounts program, has no standing to challenge it.
Thus it is not necessary to consider the legality of the Sealy
national accounts program, and the Court in no way implies any
opinion as to its propriety.
In no event, however, would Section 5(b) operate to save
plaintiff's cause of action against defendant Ward since Ward was
not named as a defendant in the government proceeding, see Sun
Theatre Corp. v. RKO Radio Pictures, Inc., 213 F.2d 284 (7th Cir.
1954); Grengs v. Twentieth Century Fox Film Corp., 232 F.2d 325
(7th Cir. 1956), cert. denied 352 U.S. 871, 77 S.Ct. 96, 1
L.Ed.2d 77 (1956); Columbia Pictures Corp. v. Charles Rubenstein,
Inc., 289 F.2d 418 (8th Cir. 1961), especially where, as here,
the allegedly unlawful conduct of Ward is totally unrelated to
the subject matter of the government suit against Sealy, Inc. Cf.
State of Michigan v. Morton Salt Co., 259 F. Supp. 35 (D.Minn.
Neither the precise conduct which was the proximate cause of
plaintiff's injury, the alleged exclusive dealing agreement, nor
even the general question of the impact of the Sealy licensing
agreements upon non-participants, was involved in the government
proceeding against Sealy, Inc. Section 5(b) of the Clayton Act,
therefore, has no application to this proceeding for the reason
that the subject matter of this complaint lacks substantial
identity with the subject matter of the government action. Leh v.
General Petroleum Corp., supra.
Defendants insist that even if there is present here a
violation of the antitrust laws, plaintiff has not in fact been
injured by it. This poses a serious problem. It appears without
dispute that plaintiff operated at a loss for the eight fiscal
years prior to the termination by Ward as well as for the three
years plaintiff remained in business thereafter, and that after
termination by Ward, plaintiff's net operating losses were less.
Plaintiff had gross profits during the years in question, and the
gross profits of plaintiff were less after it lost the Ward
business, and the record shows that plaintiff realized a profit
on at least some of its sales to Ward.*fn11 In light of these facts,
defendants insist plaintiff's recovery is barred by the
principles announced in Wolfe v. National Lead Co., 225 F.2d 427
(9th Cir. 1955) and Siegfried v. Kansas City Star Co.,
193 F. Supp. 427 (W.D.Mo. 1961), aff'd 298 F.2d 1 (8th Cir. 1962). In
this connection, McCleneghan v. Union Stockyards of Omaha,
349 F.2d 53 (8th Cir. 1965) should also be read.
It is not clear at this point whether defendants' position is
The record does not reveal whether plaintiff's losses were
occasioned solely by unprofitable bedding operations or whether
other factors unrelated to plaintiff's bedding business were
responsible for the losses. The cases relied upon by defendants
do establish, however, that plaintiff may recover only those
damages that were proximately caused by the allegedly unlawful
acts of defendants and whose amount is not purely speculative;
that plaintiff may not recover if its bedding operations
considered as a whole resulted in larger net profits (or smaller
net losses) during the existence of the alleged exclusive dealing
agreement than before its inception; that plaintiff may not
isolate its Ward account from its other bedding operations and
predicate recovery solely upon financial data related to the Ward
account alone; that plaintiff must predicate recovery upon loss
of net, rather than gross, profits; and that plaintiff may
recover in no event if the Ward business resulted in net losses.
Thus further inquiry is necessary to determine whether the net
losses of plaintiff stem from its bedding operations or other
sources, and whether plaintiff enjoyed net profits on its Ward
business and on its bedding business as a whole. There is a
limitation on plaintiff's damages that the record requires be
imposed. Since it appears without dispute that Ward purchased
private-label bedding from manufacturers other than Sealy
beginning in August, 1963, thus abandoning any exclusive dealing
agreement that may have been in existence, the period for which
plaintiff may seek damages is limited to the two years from
August, 1961 to August, 1963.
III. The Section 3 Allegation.
On summary judgment, the inferences that may be drawn from the
demonstrated facts must be viewed most favorably to the party
moved against, here the plaintiff. United States v. Diebold,
Inc., 369 U.S. 654, 82 S.Ct. 993, 8 L.Ed.2d 176 (1964);
Technograph Printed Circuits Ltd. v. Methode Electric, Inc.,
356 F.2d 442 (7th Cir. 1966). And where conflicting inferences may be
drawn, summary judgment is inappropriate. Crown Cork & Seal Co.,
Inc. v. Hires Bottling Company of Chicago, 7th Cir.,
371 F.2d 256. Opinion filed January 11, 1967. While the Court recognizes
that Rule 56 insists that the party moved against do more than
merely rely on its allegations and come forth with factual
evidence, see United States v. Mt. Vernon Mill Co., 345 F.2d 404
(7th Cir. 1965) and Beaufort Concrete Co. v. Atlantic States
Construction Co., 352 F.2d 460 (5th Cir. 1966), the Court is also
aware that summary judgment should be granted sparingly in
antitrust cases, Levin v. Joint Commission on Accreditation of
Hospitals, 122 U.S.App.D.C. 383, 354 F.2d 515 (1966), especially
where motive and intent are important factors to be considered.
Poller v. Columbia Broadcasting System, Inc., 368 U.S. 464, 82
S.Ct. 486, 7 L.Ed.2d 458 (1961); Crest Auto Supplies, Inc. v. Ero
Mfg. Co., 360 F.2d 896 (7th Cir. 1966). The principles of these
cases dictate that plaintiff is entitled to go to the jury on the
sole issue of whether there was an exclusive dealing agreement in
existence among defendants, even though plaintiff must rely in
the main on the hope that the jury will choose to disbelieve all
of defendants' witnesses who will assert that plaintiff was
terminated not pursuant to an exclusive dealing agreement but as
the result of a unilateral decision by Ward to select a national
source of supply for its private-label bedding in the hope of
achieving uniform quality control. A genuine issue of credibility
which must be submitted to the trier of fact is present here,
especially where the witnesses are interested in the outcome of
the litigation. Poller v. Columbia Broadcasting System, Inc.,
supra; Susman v. South Texas Package Stores Association, 33
F.R.D. 340 (S.D.Texas 1963); Colby v. Klune, 178 F.2d 872 (2nd
Cir. 1949). Plaintiff's case, however, is buttressed by the fact
that Ward purchased no private-label bedding from any
manufacturer other than Sealy, Inc. from August, 1961,
to August, 1963. The Court has assessed the admissibility of
evidence for the purposes of this motion, as it may do, Gauck v.
Meleski, 346 F.2d 433 (5th Cir. 1965), and even though
plaintiff's president cannot testify at trial to the existence of
the industry rumor to the effect that Ward and Sealy were locked
in an exclusive dealing agreement because of the hearsay rule,
nevertheless the interest of defendants' witnesses in the outcome
of the litigation and the issue of their credibility constitute
sufficient reasons to submit the question of the existence of an
exclusive dealing agreement to the jury. This is the only genuine
issue of fact raised by the record.
Before that may be allowed to occur, however, plaintiff must
make some showing that the alleged exclusive dealing agreement,
if found to exist, is unlawful. An exclusive dealing agreement is
not unlawful per se; it is unlawful only if a court finds that
its performance foreclosed, or will probably foreclose,
competition in a substantial share of the line of commerce
affected. Tampa Electric Co. v. Nashville Coal Co., 365 U.S. 320,
81 S.Ct. 623, 5 L.Ed.2d 580 (1961). At this point in the
litigation, plaintiff has adduced little to indicate the probable
anticompetitive effects of the alleged exclusive dealing
agreement in the appropriate product line in the relevant market
area. This is clearly its burden, and unless it is met, the Court
cannot give appropriate scrutiny to the economic ramifications,
including the possible justifications, of the alleged exclusive
dealing agreement. Susser v. Carvel Corp., 332 F.2d 505 (2d Cir.
1965). The primary concern of the antitrust laws is with the
character of competition in the line of commerce in the relevant
market and not with the fate of a particular competitor. Unless
an exclusive dealing agreement has the requisite deleterious
effects on competition by substantially lessening competition in
a significant share of the market, the law affords no redress for
any one competitor who may have been uniquely injured by it.
The relevant competitive market area is the controlling factor
in an exclusive dealing case. Tampa Electrict Co. v. Nashville
Coal Co., supra, 365 U.S. at 329, 81 S.Ct. 623, 5 L.Ed.2d 580.
While it is clear that here the line of commerce involved is
private-label cotton innerspring and matching box spring bedding,
and that the share of the market foreclosed is that percentage of
the market represented by Ward purchases, the relevant geographic
market area is not susceptible of easy definition. The relevant
market area, however, must be that in which plaintiff effectively
competed for the business of retailers of bedding under private
labels. Tampa Electric Co. v. Nashville Coal Co., supra. Whether
the share of that market represented by Ward and allegedly
foreclosed by the exclusive dealing agreement is substantial is
a question of law that remains to be determined by the Court
before trial. If it is, its foreclosure to manufacturers of
bedding other than participants in the Sealy national accounts
program will have the requisite deleterious effect on competition
required by Section 3 to condemn the alleged exclusive dealing
IV. The Section 1 and 2 Allegations.
The Court is of the opinion that the record presents no
material questions of fact with regard to whether defendants have
violated Section 2 of the Sherman Act, and that plaintiff has
shown nothing upon which to base a recovery under Section 2, thus
failing to sustain its burden under Rule 56. For these reasons,
the Court is of the opinion that defendants are entitled to
summary judgment insofar as plaintiff seeks to base its recovery
upon a violation of Section 2. Bond Distributing Co. v. Carling
Brewery Co., 32 F.R.D. 409 (D.Md.) aff'd 325 F.2d 158 (4th Cir.
1963); Crawford Transport Co. v. Chrysler, 338 F.2d 934 (6th Cir.
The Court finds it unnecessary to consider at this time whether
the conduct of the defendants violates Section 1. If defendants'
conduct does not fall within
the ban of Section 3 of the Clayton Act, it follows that it is
not proscribed by Section 1. Tampa Electric Co. v. Nashville Coal
Co., supra, 365 U.S. at 335, 81 S.Ct. 623, 5 L.Ed.2d 580.
For the reasons stated above, the defendants' motion for
summary judgment is sustained in part and denied in part.