Source: https://www.legalcrystal.com/case/100882/hudson-distributors-inc-vs-eli-lilly-co
Timestamp: 2018-02-22 11:24:44
Document Index: 636075105

Matched Legal Cases: ['§ 45', '§ 1', '§ 1', '§ 45', '§ 3', '§ 1333', '§ 1', '§ 1', '§ 1257', '§ 1257']

Hudson Distributors Inc Vs Eli Lilly and Co - Citation 100882 - Court Judgment | LegalCrystal
Hudson Distributors, Inc. Vs. Eli Lilly and Co. - Court Judgment
LegalCrystal Citation legalcrystal.com/100882
Case Number 377 U.S. 386
Appellant Hudson Distributors, Inc.
Respondent Eli Lilly and Co.
hudson distributors, inc. v. eli lilly & co. - 377 u.s. 386 (1964) u.s. supreme court hudson distributors, inc. v. eli lilly & co., 377 u.s. 386 (1964) hudson distributors, inc. v. eli lilly & co. no. 490 argued april 30, 1964 decided june 1, 1964 * 377 u.s. 386 appeal from the supreme court of ohio syllabus under the mcguire act, a trademark owner may, where sanctioned by a state fair trade act, enforce a minimum retail price established by written agreements with some retailers in the state against a notified retailer who has not signed such an agreement. pp. 377 u. s. 386 -395. 174 ohio st. 487, 190 n.e.2d 460, affirmed. mr. justice goldberg delivered the opinion of the court. these appeals.....
Hudson Distributors, Inc. v. Eli Lilly & Co. - 377 U.S. 386 (1964)
U.S. Supreme Court Hudson Distributors, Inc. v. Eli Lilly & Co., 377 U.S. 386 (1964)
Decided June 1, 1964 *
Under the McGuire Act, a trademark owner may, where sanctioned by a state fair trade act, enforce a minimum retail price established by written agreements with some retailers in the State against a notified retailer who has not signed such an agreement. Pp. 377 U. S. 386 -395.
The two appeals, one involving The Upjohn Co. and one involving Eli Lilly & Co., were considered together in the Ohio courts. [ Footnote 1 ] For simplicity, we state only the facts of the Lilly case. Appellant, Hudson Distributors, Inc., owns and operates a retail drug chain in Cleveland, Ohio. Appellee, Eli Lilly & Co., manufactures pharmaceutical products bearing its trademarks and tradenames. Lilly sells its products directly to wholesalers, and makes no sales to retailers. Hudson purchases Lilly brand products from Regal D.S., Inc., a Michigan wholesaler.
and federal law. Lilly answered and cross-petitioned for enforcement of the Ohio Act against Hudson. The Court of Common Pleas held the Ohio Act unconstitutional under the State Constitution. On appeal, the Court of Appeals for Cuyahoga County, after discussing the federal and state legislation, 117 Ohio App. 207, 176 N.E.2d 236, reversed the trial court and entered a judgment declaring that the Ohio Act was not "in violation of the Constitution of the State of Ohio nor of the Constitution of the Unit d States. . . ." The court remanded the case "for further proceedings according to law with respect to the cross-petition. . . ." [ Footnote 2 ] On further appeal, the Supreme Court of Ohio affirmed [ Footnote 3 ] the
judgment of the Court of Appeals. [ Footnote 4 ] 174 Ohio St. 487, 190 N.E.2d 460. This Court noted probable jurisdiction. 375 U.S. 938, 939.
Hudson contends that the provisions of the Ohio Act under which Lilly established minimum resale prices are not authorized by the McGuire Act, 66 Stat. 631, 15 U.S.C. §§ 45(a)(1)-(5). [ Footnote 5 ] Section 2 of the McGuire Act provides in pertinent part as follows:
Before the enactment of the McGuire Act, this Court, in 1951 in Schwegmann Bros. v. Calvert Distillers Corp., 341 U. S. 384 , considered whether the Miller-Tydings Act, 50 Stat. 693, 15 U.S.C. § 1, removed from the prohibition of the Sherman Act, 26 Stat. 209, 15 U.S.C. § 1 et seq., a state statute which authorized a trademark owner, by notice, to require a retailer who had not executed a written contract to observe resale price maintenance. Respondents in that case argued that, since the Sherman Act outlawed "contracts" in restraint of trade, and since the Miller-Tydings amendment to the Sherman Act excepted "contracts or agreements prescribing minimum prices for the resale" of a commodity where such contracts or agreements were lawful under state law, the Miller-Tydings Act therefore immunized all arrangements involving resale price maintenance authorized by state law. 341 U.S. at 341 U. S. 387 . After examining the history of the Miller-Tydings Act, the Court concluded that Congress had intended the words "contracts or agreements," as contained in that Act, to be used "in their normal and customary meaning," id. at 341 U. S. 388 , and to cover only arrangements whereby the retailer voluntarily agreed to be bound by the resale price restrictions. The Court held therefore that the state resale price maintenance law could not be applied to nonsigners -- "recalcitrants . . . dragged in by the heels and compelled to submit to price fixing." Id. at 341 U. S. 390 . The Court stated that:
Id. at 341 U. S. 395 .
Shortly after the Schwegmann decision, Congress passed the McGuire Act, [ Footnote 6 ] 66 Stat. 631, 15 U.S.C. §§ 45(a)(1)-(5). The Report of the House Committee on Interstate and Foreign Commerce, which accompanied the McGuire Act, declared that:
"The end result of the Supreme Court decision has been seriously to undermine the effectiveness of the Miller-Tydings Act and, in turn, of the fair trade laws enacted by 45 States. H.R. 5767, as amended, is designed to restore the effectiveness of these acts by making it abundantly clear that Congress means to let State fair trade laws apply in their totality; that is, with respect to nonsigners as well as signers. "
This authoritative report evinces the clear intention of Congress that, where sanctioned by a state fair trade act, a trademark owner such as Lilly could be permitted to enforce, even against a nonsigning retailer such as Hudson, the stipulated minimum prices established by written contracts with other retailers. [ Footnote 7 ]
with notice of the stipulated prices, impliedly contracted to observe the minimum prices. This implied contract theory was deemed necessary by the Ohio Legislature and by the Ohio courts to satisfy the State Constitution, which had recently been held to invalidate the enforcement of resale prices against nonsigners. Union Carbide & Carbon Corp. v. Bargain Fair, Inc., 167 Ohio St. 182, 147 N.E.2d 481 (1958). Whatever merit there may be in the argument that the logic of the Ohio implied contract theory would apply to prices set by notice alone, and without any conventional or express contracts, on the facts of the present case, we need not and do not consider whether a state statute so applied would involve "contracts or agreements" in the sense in which those terms are used in the McGuire Act. [ Footnote 8 ] The undisputed facts show that Lilly had established a system of resale price maintenance involving written contracts with some 1,400 Ohio retailers. Section 1333.29(A) of the Ohio Act authorizes the establishment of minimum prices through such contracts. Under these circumstances, the fact that the Ohio law, as construed for purposes of assessing its validity under the State Constitution, regards Hudson as a "contractor" (or "implied contractor"), rather than as a nonsigner, does not control the application and effect of the federal statute -- the McGuire Act. Section 3 of the federal Act plainly upholds "any right or right of action created by any statute . . . in effect in any State . . . which in substance" permits enforcement of resale prices prescribed in contracts whether or not the violating seller was a party to those contracts. For the purposes of § 3 of the McGuire Act, therefore, it is clear that these cases involve the requisite contracts with retailers, [ Footnote 9 ] that, regardless
Hudson also argues that the Ohio statute can be read to authorize fair trade prices to be established by persons other than the owner of the trademark or tradename. This contention raises a hypothetical issue: Lilly is the owner of all trademarks affixed to its goods, and the Ohio Supreme Court has not interpreted the statute as applying to persons other than owners. Hudson further argues that § 1333.29(A) of the Ohio Act authorizes a proprietor to establish minimum resale prices for wholesale distributors with whom it competes, and therefore conflicts with the McGuire Act under this Court's decision in United States v. McKesson & Robbins, Inc., 351 U. S. 305 . This argument also raises a hypothetical question for, as noted, Lilly sells only to wholesalers, and does not sell to retailers. [ Footnote 10 ]
The questions raised by Hudson in its second amended answer to the cross-petition, [ Footnote 11 ] including the contention
that Paragraph 6 of the Lilly fair trade contracts compels retailers to enter into allegedly unlawful horizontal price-fixing agreements in violation of § 1 of the Sherman Act, are not properly before us. They are pending and unresolved in the Ohio Court of Common Pleas, Cuyahoga County. Hudson's remaining questions are not properly presented for resolution on this appeal; they concern issues involving alleged interpretations of the Ohio Act not made or considered by the Ohio courts or not raised by the facts of the case. Asbury Hospital v. Cass County, 326 U. S. 207 , 326 U. S. 213 -214; Alabama State Federation of Labor v. McAdory, 325 U. S. 450 , 325 U. S. 470 -471.
The price-fixing authorized by the Ohio Fair Trade Act and involving goods moving in interstate commerce would be, absent approval by Congress, clearly illegal under the Sherman Act, 26 Stat. 209, 15 U.S.C. § 1 et seq. Dr. Miles Medical Co. v. John D. Park & Sons Co., 220 U. S. 373 . "Fixing minimum prices, like other types of price fixing, is illegal per se. " Schwegmann Bros. v. Calvert Distillers Corp., supra, at 341 U. S. 386 . Congress, however, in the McGuire Act, has approved state statutes sanctioning resale price maintenance schemes such as those involved here. Whether it is good policy to permit such laws is a matter for Congress to decide. Where the statutory language and the legislative history clearly indicate the purpose of Congress, that purpose must be upheld. We therefore affirm the judgments of the Supreme Court of Ohio.
"(3) paragraph 6 of Lilly's fair trade contract [which provides that: 'Retailer agrees not to knowingly sell any of Manufacturer's I dentified Commodities' to any dealer who fails to observe the minimum retail resale prices established under Paragraph 3 hereof'] compelled retailers to enter into unlawful horizontal price fixing agreements in violation of Section 1 of the Sherman Anti-Trust Act . . . ;"
The fact that separate and unresolved issues are pending in the Ohio courts and subject to "further proceedings" therein on the cross-petition does not render the judgment of the Ohio Supreme Court on the issue here considered and decided nonfinal or unappealable within the meaning of 28 U.S.C. § 1257. Cf. Local No. 438 Constitution and General Laborers' Union, AFL-CIO v. Curry, 371 U. S. 542 , 371 U. S. 548 -552; Mercantile Nat. Bank v. Langdeau, 371 U. S. 555 , 371 U. S. 557 -558.
" Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, That it is the purpose of this Act to protect the rights of States under the United States Constitution to regulate their internal affairs and more particularly to enact statutes and laws, and to adopt policies, which authorize contracts and agreements prescribing minimum or stipulated prices for the resale of commodities and to extend the minimum or stipulated prices prescribed by such contracts and agreements to persons who are not parties thereto. It is the further purpose of this Act to permit such statutes, laws, and public policies to apply to commodities, contracts, agreements, and activities in or affecting interstate or foreign commerce."
See United States v. McKesson & Robbins, Inc., 351 U. S. 305 , 351 U. S. 311 , n. 14:
§ 1257, [ Footnote 2/1 ] even assuming that the federal question which the Court decides can be deemed to have been passed on by the Supreme Court of Ohio. [ Footnote 2/2 ]
The appellant, Hudson, filed its petitions for a declaratory judgment that the Ohio Fair Trade Act [ Footnote 2/3 ] was invalid as soon as the Act went into effect. [ Footnote 2/4 ] The appellees, Upjohn and Lilly, filed answers and cross-petitions alleging Hudson's refusal to comply with the Act and seeking injunctive relief and damages. Pursuant to a stipulation of the parties and as permitted by Ohio procedure, the issue raised by the petition for a declaratory judgment -- the "general" validity of the Ohio Act -- was tried separately and in advance of the trial of all other factual and legal issues raised by the answers and cross-petitions and the responses thereto. In this posture, the cases decided together at every level, proceeded through the Ohio courts. The Court of Common Pleas for Cuyahoga County decided that the Ohio Fair Trade Act was invalid under the Ohio Constitution because it involved an unlawful delegation of legislative power. On appeal, the Court of Appeals for Cuyahoga County reversed, 117 Ohio App. 207, 176 N.E.2d 236, and remanded the case
Although the distinction between final and nonfinal judgments, for purposes of this Court's jurisdiction, has been "faint and faltering at times," Republic Natural Gas Co. v. Oklahoma, 334 U. S. 62 , 334 U. S. 69 , it has not disappeared altogether. The nature of the distinction and the reasons for maintaining it have repeatedly been stated. To be reviewed in this Court, a state court judgment must be
Market Street R. Co. v. Railroad Comm'n, 324 U. S. 548 , 324 U. S. 551 . It "must end the litigation by fully determining the rights of the parties. . . ." Gospel Army v. Los Angeles, 331 U. S. 543 , 331 U. S. 546 . See also, e.g., Mower v. Fletcher, 114 U. S. 127 , 114 U. S. 128 ; Cobbledick v. United States, 309 U. S. 323 , 309 U. S. 324 -325; Department of Banking v. Pink, 317 U. S. 264 , 317 U. S. 267 -268; Pope v. Atlantic Coast Line R. Co., 345 U. S. 379 , 345 U. S. 381 -382.
Radio Station WOW, Inc. v. Johnson, 326 U. S. 120 , 326 U. S. 123 -124.
One would have thought that the judgments reviewed here were paradigms of the nonfinal judgment. Assuming that the federal question which the Court decides was really passed on by the Ohio Supreme Court, [ Footnote 2/5 ] it is
clear nonetheless that this litigation is still in its early stages. No rights have yet been established; no liabilities have been incurred. The Court acknowledges that federal questions involving unresolved issues of fact and interpretations of the Ohio Act must still be decided by the Ohio courts. In Upjohn, No. 489, a federal question concerning the possible application of our decision in United States v. McKesson & Robbins, Inc., 351 U. S. 305 , "was reserved for future determination by the Ohio courts pursuant to a stipulation of the parties. . . ." Ante, p. 377 U. S. 394 , note 10. And in Lilly, No. 490, other questions, including at least one federal question, "are pending and unresolved in the Ohio Court of Common Pleas. . . ." Ante, p. 377 U. S. 395 . The Court can only hope that it will not prove to have wasted its time altogether in these "piecemeal proceedings," Pope v. Atlantic Coast Line R. Co., supra, at 345 U. S. 381 , because a subsequent decision of the Ohio courts renders the decision here "unnecessary and irrelevant to a complete disposition of the litigation." Id. at 345 U. S. 382 (footnote omitted). If that does not happen, there is every likelihood that the cases will be brought back to this Court for a second time, for consideration of the questions now unresolved. In Radio Station WOW, supra, at 326 U. S. 127 , this Court stated:
The Court gives no explanation at all for its departure from established principles. There is not the faintest suggestion of compelling public considerations requiring a determination of whatever issue it is that the Court does actually decide. [ Footnote 2/6 ] Nor are there any private interests at
stake which will be irremediably lost unless the Court acts, since no rights or liabilities were determined below or have been determined here. The fact that, under Ohio procedure, Hudson's petition for a declaratory judgment was separable from the cross-petition, and could be determined independently of it, has no bearing on whether that determination was final for purposes of this Court's jurisdiction. [ Footnote 2/7 ] E.g., Department of Banking, State of Nebraska v. Pink, supra, at 317 U. S. 268 ; Market Street Ry. Co. v. Railroad Comm'n, supra, at 324 U. S. 551 .
Ninety percent of this case remains submerged. I suspect that the explanation for the Court's snipping off and deciding the 10% that has reached the surface lies in the fact that the Court failed to dismiss the appeal when it was first presented, 375 U.S. 938, 939, because the jurisdictional objections to review were not then so apparent. [ Footnote 2/8 ] I am at a loss to understand why the Court chooses to compound the original error, rather than to correct it.
Id., 117 Ohio App. at 230, 176 N.E.2d 251. The Union Carbide case was concerned solely with the validity of a prior Fair Trade Act under the Ohio Constitution. In a petition for rehearing (which was denied) the appellant itself urged that the court appeared to have ignored the question whether the Ohio Act was consistent with federal law, in particular the McGuire Act. Only the formal judgment, from which the Court quotes, ante, p. 377 U. S. 388 , contains any intimation that the Court of Appeals considered any federal question.
Indeed, so far as I can tell, the Court decides nothing at all which is not already established law. In United States v. McKesson & Robbins, Inc., 351 U. S. 305 , 351 U. S. 311 , note 14, this Court stated:
Ante, p. 377 U. S. 392 . This is nothing more than a restatement of the passage quoted from McKesson & Robbins, with the names of the parties in this case filled in. No special questions which might be raised by the facts of this case or by particular features of the Ohio Act are decided here, since the Court properly leaves all such questions for the initial decision of the Ohio courts.
The fact that Hudson's original petition was for a declaratory judgment has no bearing on the jurisdictional question present here. Such fact does not defeat this Court's jurisdiction, Nashville, Chattanooga & St. Louis R. Co. v. Wallace, 288 U. S. 249 , but it surely does not create jurisdiction which would otherwise be lacking.