Not what you're
looking for? Try an advanced search.
Buy This Entire Record For
2361 STATE CORPORATION v. SEALY
January 25, 1967
2361 STATE CORPORATION, FORMERLY KNOWN AS A. BRANDWEIN & COMPANY, AN ILLINOIS CORPORATION, PLAINTIFF,
SEALY, INCORPORATED, CARL N. SINGER, SEALY MATTRESS COMPANY, MORRIS A. KAPLAN, MONTGOMERY WARD & COMPANY, INC., DEFENDANTS.
The opinion of the court was delivered by: Austin, District Judge.
Plaintiff*fn1 sues to recover damages, as provided in Section 4*fn2
of the Clayton Act, for injuries allegedly sustained as the
result of violations by the defendants of Sections 1 and 2 of the
Sherman Act and Section 3 of the Clayton Act. Discovery is
virtually complete. After careful consideration of the entire
record, it appears at this time that substantial questions of
fact remain and that defendants' motion for summary judgment can
be sustained only in part.
The record discloses the following undisputed facts. Defendant
Ward is a national retailer of merchandise. Among the many items
Ward sells is cotton innerspring and matching box spring bedding.
Ward sells nationally advertised brands of such bedding as well
as bedding manufactured for Ward to sell under its own brand
name, "Style House," so-called "private-label" bedding.
Prior to 1961, it was Ward's policy to purchase its
private-label bedding from independent manufacturers of bedding
located near its stores throughout the country. Included among
those manufacturers was the plaintiff who for many years prior to
1961 manufactured and sold private-label bedding to Ward.
Plaintiff's sales were confined to Ward stores in the midwestern
States.*fn3 Beginning late in 1959, Ward set out to select a single
resource able to supply Ward's private-label bedding needs on a
nation-wide basis. Ward considered a number of manufacturers who
were ostensibly able to do this. Early in 1961, Ward selected
Sealy, Inc. (Sealy) as its "major resource" for its private-label
bedding needs. Contemporaneously with its selection of Sealy as
its national supplier of private-label bedding, Ward notified all
of the bedding manufacturers who were then supplying its
private-label bedding needs that Ward intended to deal with them
no longer. Among those notified was the plaintiff. After
receiving notice, plaintiff endeavored to retain its Ward
business, but Ward informed plaintiff that its decision to
purchase its private-label bedding "requirements" from Sealy
alone was "irrevocable." Ward in fact did purchase any
private-label bedding in the years 1961 to 1964 inclusive, the
period specified in the complaint, from
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.
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.
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 ...