Court Opinion

ID: 9455595
Source: CourtListenerOpinion
Date Created: 2023-08-04 19:26:44.335006+00
Date Added: 2024-06-11T17:34:39.155903
License: Public Domain

FREEDMAN, Circuit Judge
(dissenting).
This antitrust case is being decided without trial, on depositions and affidavits. The Supreme Court has warned us in Poller v. Columbia Broadcasting, Inc., 368 U.S. 464, 473, 82 S.Ct. 486, 7 L.Ed. 2d 458 (1962), that in such cases, where subjective elements of motive and intention have a special relevance, summary judgment should be sparingly employed. One of the reasons for this is that affidavits signed by the litigants or their officials are drawn by their lawyers,1 and it is only under the pressure of the trial itself, where a party has the opportunity to cross-examine, that disclosure of these subjective elements can be fully achieved. Depositions, while they meet some of the objections to affidavits, are no substitute for the searching pressure of a trial in the presence of the finder of fact who observes demeanor and evaluates credibility.
It is true, of course, that Poller did not create a principle of law excluding antitrust cases from the operation of Rule 56 authorizing summary judgment. It does, however, teach us to be on guard against ignoring the outcroppings of a genuine issue of fact in the record, despite professions in affidavits or even depositions of lawful business motive and justification.
It is also true that we are not dealing here with a giant like the corporation involved in Poller. But the lure of price fixing and of customer selection may be relatively as significant to a small company as it is to a corporate giant, and motives of self-interest may make the search for proof just as difficult.
In this case, although the complaint was inadequately drawn2 and the pre*940trial proceedings were rather loosely conducted, I believe enough already appears to make summary judgment unjustified for two reasons. (1) There exists a genuine issue of fact on whether defendant terminated the relationship of the parties because plaintiff refused to observe defendant’s price fixing policy. (2) The determination whether defendant’s admitted restriction of the resale of its products to professional beauticians was either unlawful per se under the rule in United States v. Arnold, Schwinn & Co., 388 U.S. 365, 87 S.Ct. 1856, 18 L.Ed.2d 1249 (1967), or unreasonable under the test of the “rule of reason” of Standard Oil Co. of New Jersey v. United States, 221 U.S. 1, 31 S.Ct. 502, 55 L.Ed. 619 (1911), cannot adequately be made without further factual information.
I.
It is undenied that defendant’s general sales manager wrote a letter to the plaintiff on June 21, 1967, which speaks both of price and restrictive policy on resales. This letter was tendered by the defendant itself on depositions in order to contradict plaintiff’s claim that plaintiff had received no warning before defendant terminated their relationship. Although plaintiff denied receipt of the letter, this is of no real significance, for the immediate question is not the effect on the plaintiff but rather the conduct of the defendant, and this is its own statement describing its conduct and its purpose. I believe the letter alone is sufficient to forbid the entry of summary judgment for the defendant. It reads as follows:
“We have been advised that you are now operating retail stores in which Wella merchandise is being sold. You will note our packages are marked ‘for professional use only’ not to be sold retail. We note too that your prices are contrary to our advertised deals.
“I am sure you can appreciate the difficult position you place us in when this type of activity is permitted.
“We would like your cooperation in selling Wella merchandise only to professional registered hairdressers as well as your agreement to honor Wella policies in the distribution of merchandise bearing our name.”
It is, of course, not clear beyond doubt what is meant by “advertised deals,” but defendant, who seeks summary judgment, has supplied no explanation on the record. On its face, it is enough to establish that defendant complained that the prices plaintiff was charging were contrary to something which the defendant established. This brings the case into the forbidden area of price fixing. Indeed, it seeks the plaintiff’s cooperation and agreement to honor the defendant’s policies. It is true that this letter seems a stray piece of evidence, but it is not to be expected that intentions of price fixing are to be extensively recorded in documents coming from a defendant in an antitrust case. It is enough that there is even a hint of price fixing, which would create liability per se,3 to require the case to be tried. Such an issue should not be lost in a summary judgment.
II.
The defendant claims that it terminated its relationship with plaintiff not because of a failure to maintain prices, but rather because of refusal to conform to the restriction of the resale of defendant’s products to professional beauticians. This restriction is claimed to be justified by the danger of physical harm to non-professional users. In my *941view, the record is too incomplete and inadequate to eliminate for consideration on a trial the question whether this restriction violates the antitrust law.
It is not enough to say that there is some danger in the use of hair dressings and similar items made by the defendant or to cite damage recoveries against a cosmetic manufacturer.4 It is by now a truism that individual susceptibilities at times produce injury because of allergic or other reactions to products or materials generally used without ill effect. It is common knowledge that even familiar household drugs in wide use, such as aspirin, can in some cases produce harmful side effects. It would be astonishing if this well known fact would justify a producer’s restriction of the ultimate marketing of his products to physicians and druggists.
Here, several of the products of the defendant admittedly present no great danger if used in accordance with instructions. Others present no real danger if the patch test which the defendant suggests is employed. Yet defendant applies to these products its restriction against resale to non-professionals. Indeed, there is even some acknowledge-. ment by the defendant that it prohibits the resale of certain non-dangerous products “out of loyalty to the hairdressers” because its main business is the production of items for the professional beautician.
Moreover, the letter of June 21, 1967, which dealt with both prices and nonprofessional sales, was admittedly written by the defendant not out of its concern for the safety of the ultimate consumer, but rather as a result of complaints by other distributors and beauticians that plaintiff was selling the products to retailers. It is these complaints which the defendant investigated, and as a result of which it wrote the letter.
The requirement by a producer or manufacturer that the purchaser of his product may not resell it to certain classes of purchasers is by now recognized as a serious restriction on freedom of trade and competition which the antitrust laws are meant to preserve.5 In some cases such a restriction is deemed illegal per se,6 and in others the rule of reason applies,7 requiring a knowledge of all the surrounding circumstances which reveal the practical effect and meaning of the restriction. Even if defendant’s claim that it imposed the restriction on resale out of concern for the safety of the consumer were enough to take it out of the per se rule of Schwinn, the self-serving statements by lay businessmen of self-evident possibilities of harm are inadequate to prevent a trial of the issue under the rule of reason. We have before us no scientific or other expert testimony describing the nature or extent of the danger to laymen from the use of any of defendant’s products, nor of any experience in the use of similar products containing adequate.. notice or warning. Information of this kind goes to the heart of plaintiff’s case. For plaintiff has not claimed that there may be no danger whatever from the use of some of the defendant’s products. Its claim instead is that whatever danger there is constitutes a risk which can reasonably be guarded against by labeling or even by *942individual cautionary advice. The effectiveness of this depends to a large extent, of course, on the nature of the risk and of the means which must be taken to guard against its potential harm.
Summary judgment, of course, is to be granted only after all doubts as to the existence of a genuine issue of a material fact are resolved against the moving party.8 However meager may be the plaintiff’s case, it has called forth from the defendant a defense which, if not subject to a per se rule, must at least fit the requirement of the rule of reason. I fail to see how such a determination can be made at this stage of the case. To me the words of the Supreme Court in White Motor Company v. United States, 372 U.S. 253, 263-264, 83 S.Ct. 696, 702, 9 L.Ed.2d 738 (1963) are applicable here:
“We do not know enough of the economic and business stuff out of which these arrangements emerge to be certain. They may be too dangerous to sanction or they may be allowable protections * * *. We need to know more than we do about the actual impact of these arrangements on competition to decide whether they have such a ‘pernicious effect on competition and lack * * * any redeeming virtue’ * * * and therefore should be classified as per se violations of the Sherman Act. * * * We conclude that the summary judgment * * * was improperly employed in this suit. * * * We do not intimate any view on the merits. We only hold that the legality of the * * * limitations should be determined only after a trial.”
I would reverse the entry of summary judgment for the defendant and remand the case for trial.

. Thus, the affidavits of defendant’s employees, Palumbo, Silvestro, Paraine and Hayman, all were carefully drawn in virtually identical language.

. I agree, as the majority in effect holds, that we should treat the case as if the complaint had been amended to conform to the substance of the claim as it now *940appears. This general principle is especially applicable in view of the public interest in the enforcement of the antitrust laws by private suitors.

. United States v. Parke, Davis & Co., 362 U.S. 29, 43-44, 80 S.Ct. 503, 4 L.Ed.2d 505 (1960); Dr. Miles Medical Co. v. John D. Park & Sons Co., 220 U.S. 373, 31 S.Ct. 376, 55 L.Ed. 502 (1911).

. Helene Curtis Industries, Inc. v. Pruitt, 385 F.2d 841 (5 Cir. 1967), cert. denied 391 U.S. 913, 88 S.Ct. 1806, 20 L.Ed.2d 652 (1968), cited by defendant, in fact held that the manufacturer of a product which contained a label restricting resale to professional users was not liable to a user who had purchased it.

. White Motor Co. v. United States, 372 U.S. 253, 83 S.Ct. 696, 9 L.Ed.2d 738 (1963).

. United States v. Arnold, Schwinn & Co., 388 U.S. 365, 87 S.Ct. 1866, 18 L.Ed.2d 1249 (1967).

. Janel Sales Corp. v. Lanvin Parfums, Inc., 396 F.2d 398 (2 Cir.), cert. denied 393 U.S. 938, 89 S.Ct. 303, 21 L.Ed.2d 275 (1968).

. Fortner Enterprises, Inc. v. United States Steel Corp., 394 U.S. 495, 500, 89 S.Ct. 1252, 22 L.Ed.2d 495 (1969); Poller v. Columbia Broadcasting, Inc., 368 U.S. 464, 473, 82 S.Ct. 486, 7 L.Ed.2d 458 (1962). Also, Season-All Industries, Inc. v. Turkiye Sise Ve Cam Fabrikalari A.S., 425 F.2d 34 (3 Cir. 1970); Toebelman v. Missouri-Kansas Pipe Line Co., 130 F.2d 1016, 1018 (3 Cir. 1942).