United States District Court, N.D. Illinois, Eastern Division
August 31, 2005.
GEORGIA CARPET SALES, INC., d/b/a GEORGIA CARPETS, Plaintiff,
NOURISON RUG CORPORATION, a New York corporation, Defendant.
The opinion of the court was delivered by: JOHN W. DARRAH, District Judge
MEMORANDUM OPINION AND ORDER
Plaintiff, Georgia Carpet Sales, Inc., filed suit against
Defendant, Nourison Rug Corporation, alleging violation of
Section 1 of the Sherman Antitrust Act, violation of the Illinois
Antitrust Act, and breach of contract. Following the close of
discovery, Defendant moved for summary judgment. Defendant's
Motion for Summary Judgment was denied as untimely. Defendant now
moves to dismiss Plaintiff's Complaint for lack of subject matter
A reading of the Complaint and of the materials submitted by
the parties supports the following summary of facts.
Georgia Carpets' principal place of business is in Westmont,
Illinois. Georgia Carpets primarily resells carpets and rugs to
consumers in Illinois. Nourison's principal place of business is
in Saddlebrook, New Jersey. Nourison is engaged in the
manufacturing and selling of area rugs within the United States.
In the Fall of 2001, a representative of Nourison solicited
Georgia Carpets to purchase and resell Nourison's line of area
rugs. Georgia Carpets purchased a number of rugs and began to
market the rugs for resale to consumers. In December 2003,
Nourison's sales representative, Brenda Schmid, visited Georgia Carpets' showroom for the purpose
of showing area rugs to Howard Lieberman. While at the showroom,
Schmid noticed the prices on the area rugs that Georgia Carpet
had purchased from Nourison. Schmid told Lieberman that Georgia
Carpets' prices were too low.
In February 2004, Georgia Carpets placed orders for area rugs
that Nourison had in stock on behalf of consumers who paid
deposits for their order. After the area rugs did not arrive
within the usual shipping time frame, Lieberman called Nourison's
order desk regarding an order. The order desk first told
Lieberman that the order had not shipped and that it would ship
any day. Later that month, Lieberman contacted the order desk
again to find out why the order had still not shipped. The order
desk told Lieberman that the order had not shipped but would not
tell him why it had not shipped. Lieberman checked with
Nourison's credit department, which informed Lieberman that
Georgia Carpets' credit was excellent. Later that day, Nourison's
Vice President of National Sales telephoned Lieberman and told
him that Nourison's owner knew all about the matter and that
Nourison did not have to explain why the order never shipped.
The next day, Nourison's Vice President of Finance telephoned
Lieberman and asked whether Georgia Carpets wanted to return its
inventory. Lieberman inquired about orders that had not shipped.
Nourison offered a false pretext as to why the orders had not
been filled. The following day, Lieberman again spoke with the
Vice President of Finance about a certain order. He informed
Lieberman that Nourison had first "held up" and then cancelled
the order. Later that day, Nourison's Chief Financial Officer
telephoned Lieberman and asked whether Georgia Carpets wanted to
continue to do business but would not commit to filling orders so
that Georgia Carpets could resell them for the prices to which it
had committed to its customers. Because Nourison refused to ship the rugs, Georgia Carpets refunded the deposits to its customers
and lost the sales for those rugs.
Georgia Carpets alleges that Nourison and other co-conspirators
engaged in price fixing to maintain inflated resale prices and
insure that the co-conspirators would maintain their customers
and be able to charge inflated prices. Nourison's and the
co-conspirators' conduct included: (1) discussing prices being
charged for area rugs resold to customers; (2) agreeing to raise,
fix, and maintain prices for area rugs resold to consumers; (3)
raising, fixing, and maintaining prices for area rugs sold to
consumers; (4) discussing and agreeing on restraining dealers who
resold area rugs for lowers prices; and (5) monitoring, coercing,
and enforcing adherence to higher prices for area rugs.
When the jurisdiction of the court is contested, "the party
invoking jurisdiction has the burden of supporting the
allegations of jurisdictional facts by competent proof." Grafon
Corp. v. Hausermann, 602 F.2d 781, 783 (7th Cir. 1979), citing
McNutt v. General Motors Acceptance Corp., 298 U.S. 178, 189
(1936). In making its determination whether subject matter
jurisdiction exists, the court may look beyond the jurisdictional
allegations in the complaint and view whatever evidence has been
submitted on the issue. Capital Leasing Co. v. FDIC,
999 F.2d 199, 191 (7th Cir. 1993). The court may weigh the evidence in
order to satisfy itself that subject matter jurisdiction exists.
Therefore, disputes over material questions of fact do not
preclude the court from deciding jurisdictional issues. Lumpkin
v. United States, 791 F. Supp. 747, 749 (N.D. Ill. 1992).
Jurisdiction exists in an antitrust suit if the defendant's
conduct affects interstate commerce of that business. See
Cherney Disposal Co. v. Chicago & Suburban Refuse Disposal
Assoc., 484 F.2d 751, 759-60 (7th Cir. 1974); Gateway Assoc.,
Inc. v. Essex-Costello, Inc., 380 F. supp. 1089, 1092-93 (N.D.
Ill. 1974). No more than a non-frivolous claim under federal law is
necessary for subject matter jurisdiction. See Johnson v. Apna
Ghar, Inc., 330 F.3d 999, 1001 (7th Cir. 2003). "Jurisdiction . . .
is not defeated . . . by the possibility that the averments
might fail to state a cause of action on which petitioners could
actually recover." Bell v. Hood, 327 U.S. 678, 682 (1946).
Dismissal for lack of subject matter jurisdiction because of
inadequacy of the federal claim is only proper when the claim is
"so insubstantial, implausible, foreclosed by prior decisions of
this Court, or otherwise completely devoid of merit as to not
involve a federal controversy." Oneida Indian Nation of NY v.
County of Oneida, 414 U.S. 661, 666 (1974) (Oneida).
Nourison argues that Georgia Carpets has failed to demonstrate
subject matter jurisdiction for its antitrust claims because it
has not identified any of the co-conspirators, and it has no
evidence that Nourison has market power to demonstrate a
price-fixing claim absent direct evidence of such price fixing.
Nourison's arguments improperly go to the merits of Georgia
Carpets' claims. The allegations and materials provided
demonstrate that Nourison's conduct affects interstate commerce
of the retail carpet and rug business. Furthermore, based on the
allegations and materials provided, it cannot be said that
Georgia Carpets' antitrust claims are so insubstantial,
implausible, or otherwise completely devoid of merit as to not
involve a federal controversy to defeat subject matter
jurisdiction. See Oneida, 414 U.S. at 666.
Furthermore, based on the above, Nourison's argument that the
Court lacks jurisdiction over the state law claim of breach of
contract because of the lack of a federal antitrust claim and
diversity jurisdiction is moot. For the foregoing reasons, Nourison's Motion to Dismiss for
Lack of Subject Matter Jurisdiction is denied.
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