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FAGAN v. SUNBEAM LIGHTING CO.

August 15, 1969

JOSEPH A. FAGAN, PLAINTIFF,
v.
SUNBEAM LIGHTING CO., INC., EASTERN, A CALIFORNIA CORPORATION, AND KEN GLAESNER, DEFENDANTS.



The opinion of the court was delivered by: Robert D. Morgan, District Judge.

OPINION AND ORDER

This is a private antitrust suit for treble damages arising under the Commerce and Trade Laws of the United States, 15 U.S.C. § 1ff. Jurisdiction is founded on 28 U.S.C. § 1337. The case is presently before the court on defendant Sunbeam's motion, under F.R.C.P. 12(b)(6), to dismiss the complaint because of plaintiff's "failure to state a claim upon which relief can be granted," or, in the alternative, to strike portions of the complaint. Defendant Glaesner has never been served with summons.

The allegations of the complaint, which are taken as true for purposes of this motion, state that the defendant Ken Glaesner is the Eastern Regional Manager of the defendant corporation; that the plaintiff was a sales representative of the defendant corporation by an agreement which states in pertinent part that:

  "1. The Company does hereby appoint * * * (Fagan) its
  exclusive Sales representative for * * * the
  following described territory * * *.
  "2. The terms of the agreement shall commence on the
  date hereof and continue until terminated by either
  party upon the giving of thirty (30) days prior
  notice * * *.
  "3. (a) * * * He shall not be precluded from handling
  other lines or acting as Sales Representative for
  other companies, provided, however, that he shall not
  during the term of this Agreement maintain any
  connection, directly or indirectly, of any kind, with
  any person, firm, or corporation which is engaged in
  competition with the Company.
  "4. The authority of the Sales Representative shall
  be limited to soliciting orders for the Company's
  lighting fixtures at the prices and on the
  terms * * * established by the Company * * *.

  The Sales Representative shall have no power or
  authority in any manner to obligate or bind the
  Company * * *. The Sales Representative is expressly
  declared not to be an agent of the Company and is and
  shall be in all respects an independent contractor.
  "14. This Agreement has been executed in the * * *
  State of California, and shall be interpreted
  according to the laws of the State of
  California. * * * The statute of limitations on any
  claim of Sales Representative against Company shall
  be six (6) months from the date of termination or
  the occurrence of the claim, whichever is earlier."

Plaintiff, during the contract period, did represent companies with similar products to those of defendant and by reason thereof the defendant corporation terminated the "Sales Representative Agreement" on or about August 2, 1968.

Plaintiff argues that the agreement and conduct of the defendants operated as a conspiracy in restraint of interstate commerce, tending to lessen competition since the plaintiff was compelled to refrain from representing manufacturers and distributors of similar products, and creating a monopoly for the defendants within the Southern District of Illinois, to the plaintiff's damage in excess of $100,000.

The defendant Sunbeam argues that the claim alleged herein is barred by the six-month limitation provision of the contract pleaded. The contract states that the agreement shall be interpreted according to the laws of the State of California where the agreement was executed. Said defendant cites numerous cases from California and several federal cases which hold that a six-month contractual limitation period is reasonable and valid.

This court might agree that the limitation is reasonable and valid if the action were a suit upon the contract or for breach thereof. The action before this court, however, is based upon federal public policy as expressed in the antitrust laws of the United States. The contract is simply offered as evidence of the alleged violation of that policy. An action to recover treble damages under the Clayton Act is a civil remedy sounding in tort. Clark Oil Co. v. Phillips Petroleum Co., 148 F.2d 580 (8th Cir. 1945) cert. denied, 326 U.S. 734, 66 S.Ct. 42, 90 L.Ed. 437 (1945). It is clear that federal law controls in determining whether the action was properly commenced. Moore Co. v. Sid Richardson Carbon & Gasoline Co., 347 F.2d 921 (8th Cir. 1965), cert. denied, 383 U.S. 925, 86 S.Ct. 927, 15 L.Ed.2d 845 (1966), rehearing denied, 384 U.S. 914, 86 S.Ct. 1335, 16 L.Ed.2d 367 (1966). The lack of uniformity in state statutes of limitations was the prime factor which motivated Congress to enact the four year statute of limitations applicable to private antitrust litigation. Kansas City v. Federal Pacific Electric Co., 310 F.2d 271 (8th Cir. 1962), cert. denied, 371 U.S. 912, 83 S.Ct. 256, 9 L.Ed.2d 171, (1962), rehearing denied, 373 U.S. 914, 83 S.Ct. 1297, 10 L.Ed.2d 415 (1962). Because of the nature of this action and to be consistent with the spirit of uniformity, the limitation period of four years contained in 15 U.S.C. § 15b must be applied and the commencement of this action was well within that period.

Second, the defendant Sunbeam argues that venue is improper and therefore the action should be transferred to another district. There were no specific grounds argued for transfer, but it appears that the defendant's basis is either that California was the state of execution, or that since the contract provided that California law be applied, California is the proper forum. This court does not consider either ground sufficient to override plaintiff's choice of forum. This court may be bound to apply California law in any construction of the contract, but the federal antitrust laws govern venue of an action thereunder. Section 12 of the Clayton Act enlarged the local jurisdiction of the district courts so as to establish the venue of a suit not only in a district in which the corporation resides or is found, but also in any district in which it transacts business. Eastman Kodak Co. v. Southern Photo Materials Co., 273 U.S. 359, 47 S.Ct. 400, 71 L.Ed. 684 (1927). In Eastman the court stated (273 U.S. at 374, 47 S.Ct. at 404) that:

  "* * * since it appears * * * that the defendant, in
  a continuous course of business, was engaged, not
  only in selling and shipping its goods to dealers
  within the Georgia district, but also in soliciting
  orders therein through its salesmen and promoting the
  demand for its goods through its demonstrators for
  the purpose of increasing its sales, we conclude that
  it was ...

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