Court Opinion

ID: 9452695
Source: CourtListenerOpinion
Date Created: 2023-08-04 17:49:05.539772+00
Date Added: 2024-06-11T17:33:18.615149
License: Public Domain

CUMMINGS, Circuit Judge
(dissenting in part).
I agree with the majority that Crest Auto Supplies, Inc. v. Ero Manufacturing Company, 360 F.2d 896 (7th Cir. 1966) supports the in pari delicto defense to Counts 1 and 2. However, an examination of the briefs filed in Crest reveals that Simpson v. Union Oil Co., 377 U.S. 13, 84 S.Ct. 1051, 12 L.Ed.2d 98, was not cited to this Court. A close study of the Simpson case, including the briefs filed therein, convinces me that the Supreme Court would not accept the in pari delicto defense here. As with these plaintiffs, Simpson had freedom of choice “to accept or reject the tendered lease and consignment contract. The record shows that he went into this deal with his eyes open and knew all the facts.” He “deliberately and knowingly enter[ed] into [the] contractual obligations * * (311 F.2d 764, 768, 769.) In Simpson, the Ninth Circuit used the in pari delicto theory to deny him any recovery. That point was fully briefed in the Supreme Court, which reversed, permitting Simpson to prevail. Therefore, I am forced to conclude that the Supreme Court rejected the in pari delicto defense. Judge McLean came to the same conclusion in Lyons v. Westinghouse Electric Corporation, 235 F.Supp. 526, 537 (S.D.N.Y.1964), stating:
“It may be noted that under Simpson v. Union Oil Co., supra, the fact that plaintiffs voluntarily entered into an illegal contract does not in itself bar their recovery. The contract, if illegal, is still an actionable wrong.” 1
In Simpson, even Mr. Justice Stewart’s dissent agreed that the in pari delicto reasoning of the Ninth Circuit was “untenable” (377 U.S. at p. 25, 84 S.Ct. 1051). As in Simpson, these defendants had the coercive power to terminate plaintiffs’ franchises if plaintiffs did not adhere to the resale price maintenance and exclusive dealing provisions. These plaintiffs wished to buy various parts (tailpipes, clamps, etc.) from competitors of Midas who were selling at lower prices than Midas. If they had been permitted to purchase at these lower prices, they would have been able to lower their prices, as did Simpson.
As stated in Simpson (377 U.S. at pp. 16,17, 18, 84 S.Ct. at p. 1054):
“The fact that a retailer can refuse to deal does not give the supplier immunity if the arrangement is one of those schemes condemned by the antitrust laws.
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“The exclusive requirements contracts struck down in Standard Oil Co. v. United States, 337 U.S. 293, [69 S.Ct. 1051, 93 L.Ed. 1371,] were not saved because dealers need not have agreed *705to them, but could have gone elsewhere.
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“The interests of the Government also frequently override agreements that private parties make. Here we have an antitrust policy expressed in Acts of Congress. Accordingly, a consignment [here a franchise agreement], no matter how lawful it might be as a matter of private contract law, must give way before the federal antitrust policy. * * * Nor does § 1 of the Sherman Act tolerate agreements for resale price maintenance.”
The public policy justifying the denial of an in pari delicto defense in a case of this sort was stated as follows with reference to' the unclean hands defense raised in Kiefer-Stewart Co. v. Joseph E. Seagram & Sons, Inc., 340 U.S. 211, 214, 71 S.Ct. 259, 95 L.Ed. 219:
“If petitioner and others were guilty of infractions of the antitrust laws, they could be held responsible in appropriate proceedings brought against them by the Government or by injured private persons. The alleged illegal conduct of petitioner, however, could not legalize the unlawful combination by respondents nor immunize them against liability to those they injured.” 2
With respect to the majority’s alternative basis discussed at p. 699 supra, this record shows that Midas and International held themselves out as separate and “divorced”. Therefore, Kiefer-Stewart Co. v. Joseph E. Seagram & Sons, Inc., 340 U.S. 211, 71 S.Ct. 259, does not permit defendants to claim that as a single business entity they were unable to conspire. Furthermore, under Simpson v. Union Oil Co., 377 U.S. 13, 84 S.Ct. 1051, and Northern Pacific Railway Co. v. United States, 356 U.S. 1, 78 S.Ct. 514, 2 L.Ed.2d 545, a conspiracy is not needed to support Count 1.
As to the muffler part of Count 3, defendants have not cited any authorities or legislative history to show that the difference in the Midas and International guarantees makes these physically identical mufflers3 dissimilar in grade and quality within the meaning of Section 2(a) of the Robinson-Patman Act. Cf. Federal Trade Commission v. Borden Co., 383 U.S. 637, 86 S.Ct. 1092, 16 L.Ed.2d 153, with the District Court’s opinion herein (1966 CCH Trade Cases at p. 82,-710). Therefore, affirmance on this point is not justified.
Except as indicated, I concur in the opinion of the Court.

. Professor Day interprets the Simpson ease in accordance with Judge McLean’s opinion. See 25 ABA Antitrust Section 240 (1964). Other cases disapproving the in pari delicto defense in certain situations include Waldron v. British Petroleum Co., 231 F.Supp. 72, 91-92 (S.D.N.Y.1964) and Mason City Tent & Awning Company v. Clapper, 144 F.Supp. 754, 769-770 (W.D.Mo.1956). With respect to Bales v. Kansas City Star Co., 336 F.2d 439, 444 (8th Cir. 1964), discussed at pp. 698-699, supra, these plaintiffs also seem to have “accepted the contract restriction only in business necessity” and not in an effort to help Midas violate the antitrust laws, so that the in pari delicto defense would be inapplicable to them under Bales. Cf. Englander Motors, Inc. v. Ford Motor Company, 267 F.2d 11 (6th Cir. 1959); Alles Corporation v. Senco Products, Inc., 329 F.2d 567 (6th Cir. 1964).

. See also Budget Dress Corp. v. International Ladies’ Garment Workers’ Union, 25 F.R.D. 506, 508, 509 (S.D.N.Y.1959); Trebuhs Realty Co. v. News Syndicate Co., 107 F.Supp. 595, 599 (S.D.N.Y.1952).

. A different gauge of steel was used in the Midas muffler after January 1, 1959, but plaintiffs have limited their claim to pre-1959 mufflers.