Opinion ID: 355867
Heading Depth: 1
Heading Rank: 2

Heading: Pick-Barth

Text: 8 A supplier may switch dealers and conspire with a new dealer to take the place of an established one. Without more, the antitrust laws do not stand in their way. Burdett Sound, Inc., 515 F.2d at 1248-1249. 9 Plaintiff argues that Northwest distributed brands of PAT other than Omark, that the defendants conspired to use unfair means to eliminate Northwest as a competitor, and this action brings the defendants' conduct within the prohibition of the Sherman Act. The types of unfair competition assertedly employed by the defendants include (1) employee disloyalty, (2) misappropriation of a trade secret customer list, and (3) trade disparagement. 10 The first court to hold that a conspiracy to eliminate a competitor by unfair means violates the Sherman Act was the First Circuit in Albert Pick-Barth Co. v. Mitchell Woodbury Corp., 57 F.2d 96 (1st Cir.), cert. denied, 286 U.S. 552, 52 S.Ct. 503, 76 L.Ed. 1288 (1932). The defendant, Pick-Barth, was a dominant factor in the national market for kitchen equipment and utensils. Pick-Barth's trade in the New England states, however, was limited. To break into that market, Pick-Barth hired away the plaintiff's employees and wrongfully obtained its customer list. The First Circuit, reversing a jury verdict that no unreasonable restraint of trade resulted, held that the intent to eliminate a competitor by unlawful or unfair competition violated the Act. A later case before the same court characterized the offense as per se. Atlantic Heel Co. v. Allied Heel Co., 284 F.2d 879 (1st Cir. 1960) (two judges concurring in result only). In its most recent consideration, the First Circuit limited Pick-Barth and Allied Heel to what it perceived to be their facts, but did not overrule them. George R. Whitten, Jr., Inc. v. Paddock Pool Builders, Inc., 508 F.2d 547 (1st Cir. 1974). 11 One other circuit court has recognized a Pick-Barth cause of action under the Sherman Act, Perryton Wholesale, Inc. v. Pioneer Distributing Co., 353 F.2d 618 (10th Cir. 1965), cert. denied, 383 U.S. 945, 86 S.Ct. 1202, 16 L.Ed.2d 208 (1966). That decision did not use per se language. One district court, however, has expressly applied a per se test, holding no anticompetitive effect need be shown. Albert Sauter Co. v. Richard S. Sauter Co., 368 F.Supp. 501, 512-514 (E.D.Pa.1973) (verdict for plaintiff). Other courts have allowed trial of issues framed along the lines of the Pick-Barth theory of liability. See Snyder v. Howard Johnson's Motor Lodges, Inc., 412 F.Supp. 724, 729 (S.D.Ill.1976) (denied summary judgment); Tower Tire & Auto Center, Inc. v. Atlantic Richfield Co., 392 F.Supp. 1098 (S.D.Tex.1975) (denied summary judgment); Mr. Hanger, Inc. v. Rizzuto, 410 F.Supp. 1158 (S.D.N.Y.1975) (denied motion to dismiss for lack of jurisdiction); Vogue Instrument Corp. v. Lem Instruments Corp., 40 F.R.D. 497 (S.D.N.Y.1966) (denied summary judgment). 12 Our own decisions have never expressly considered Pick-Barth. See Southland Reship, Inc. v. Flegel, 534 F.2d 639, 643 (5th Cir. 1973). In Cherokee Laboratories, Inc. v. Rotary Drilling Services, Inc., 383 F.2d 97 (5th Cir. 1967), cert. denied, 390 U.S. 904, 88 S.Ct. 816, 19 L.Ed.2d 870 (1968), we concluded that a case for the jury existed when a supplier enticed plaintiff distributor's employees into forming a new distribution organization for the supplier who then raised his prices to the plaintiff. In Burdett Sound, Inc., however, without mentioning Cherokee, we rejected the theory that an allegation of unfair trade practices in the distributor substitution context could resist a motion for summary judgment, reasoning that attempts to drive another competitor out of business did not apply to substitutions. 515 F.2d at 1248. See also Craig v. Sun Oil Co., 515 F.2d 221 (10th Cir. 1975), cert. denied, 429 U.S. 829, 97 S.Ct. 88, 50 L.Ed.2d 92 (1976); Ace Beer Distributors, Inc. v. Kohn, Inc., 318 F.2d 283 (6th Cir.), cert. denied, 375 U.S. 922, 84 S.Ct. 267, 11 L.Ed.2d 166 (1963). By examination of the original Cherokee Laboratories, Inc. and Burdett Sound, Inc. briefs, we have ascertained that in both cases the plaintiff relied on cases from the Pick-Barth line, but neither published opinion cites them. 13 This case is different from Burdett Sound, Inc. in some respects. Here the acts of unfair competition were not only designed to switch customers from one distributor to another, but they were also calculated to protect Omark from the new Ramset and Diamond brands carried by Northwest. Burdett Sound, Inc. only addressed conduct designed to lessen intrabrand competition. Here interbrand competition is also at stake, and interbrand competition is the primary concern of antitrust law. Continental T.V., Inc. v. GTE Sylvania, Inc. 433 U.S. 36, 52 n.19, 97 S.Ct. 2549, 53 L.Ed.2d 568 (1977). 14 Cherokee Laboratories, Inc. was also an interbrand case. While that provides some basis for distinguishing the two cases, in view of this Court's prior failure to address squarely the per se issue raised by the plaintiff, we will confront that question first, and then, rejecting the per se rule, turn to consideration of whether the facts here can establish an antitrust violation under the rule of reason. 15