Court Opinion

ID: 9444724
Source: CourtListenerOpinion
Date Created: 2023-08-03 21:10:09.965164+00
Date Added: 2024-06-11T17:29:58.932080
License: Public Domain

TUTTLE, Circuit Judge.
The sole question here is whether the complaint states a claim for which relief can be granted. Jurisdiction is properly based on diversity of citizenship, and the applicable substantive law is that of the State of Florida. Sunbeam Corporation commenced this action, seeking an injunction and damages on the ground that Masters of Miami, the defendant below, wrongfully interfered with Fair Trade contracts between Sunbeam and the distributors and retailers of its products in states where such contracts are valid, by inducing them to sell to Masters of Miami the trademarked products of Sunbeam in violation of the Fair Trade contracts. For a second cause of action it was alleged that Masters of Miami, by buying and selling Sunbeam products without having entered a Fair Trade contract with Sunbeam, had unlawfully appropriated Sunbeam’s trademarks; but since Sunbeam’s brief on appeal does not make any ar*193gument relative to the dismissal of the second cause of action, under our Rules that matter may be disregarded. Rule 24.2(b). The court' below having dismissed the complaint for failure to state a claim for which relief can be granted, Sunbeam appealed and asks that we determine whether “it appears to a certainty that the plaintiff cannot possibly be entitled to relief under any set of facts which could be proved in support of” the allegations under the first claim in the complaint. This being the test of sufficiency of a complaint, we must reverse the judgment if the complaint satisfies this test. John Walker & Sons v. Tampa Cigar Co., 5 Cir., 197 F.2d 72; Byrd v. Bates, 5 Cir., 220 F.2d 480.
The complaint alleges that Sunbeam Corporation has for more than thirty years been engaged in manufacturing and selling electrical-and other appliances under the trade name “Sunbeam” and other trade names. At present its gross sales exceed $70 million a year and its annual advertising and promotional expenses exceed $3 million. Sunbeam’s products are distributed through some 1,200 wholesalers throughout the United States, who supply over 175,000 retail dealers, several thousand of whom are in the State of Florida. In order to take advantage of the so-called Fair Trade Laws existing in 45 states, including Florida, Sunbeam has adopted and followed since 1951 a policy of selling its products in these 45 states only to distributors who contract (1) not to advertise or sell Sunbeam products at less than the minimum wholesale price established by Sunbeam, and (2) to require all persons to whom it sells Sunbeam products to enter into contracts whereby such persons will not, in turn, advertise or sell such products for less than the retail price established by Sunbeam. Through this policy of resale price maintenance, combined with the high quality of its merchandise and national advertising, it is alleged that Sunbeam’s trade marks and brand name have acquired great value. Defendant Masters of Miami, Inc., has the same officers and stockholders as Masters, Inc., a New York corporation, which is engaged in Fair Trade litigation with Sunbeam in the State of New York, and by virtue of this fact and of specific notice given by Sunbeam, Masters of Miami, Inc., is well aware of Sunbeam’s Fair Trade distribution policy. However, although it has not signed a retail contract with Sunbeam, it is engaged in advertising and selling at retail the products manufactured by Sunbeam at less than the prices specified in the Fair Trade contracts. Furthermore, it is alleged that Masters of Miami, Inc., has interfered with the contracts between Sunbeam and its wholesalers and retailers by purchasing Sunbeam products through channels and means unknown to Sunbeam, knowing that these wholesalers and retailers were not permitted to sell such products to a nonsigner. It is further alleged that in order to conceal their source, Masters of Miami, Inc., destroyed and defaced all shipping labels on Sunbeam products it had acquired in this manner.
The court below was of the opinion that no recovery could be had on this complaint because to allow any relief would be against the public policy of Florida, and furthermore because the complaint fails to set forth specific acts of interference.
We are of the opinion that the complaint was sufficiently specific under the test announced by us in the John Walker case, supra. Assuming that liability could be predicated on a specific state of facts falling within the general allegations of the complaint, Sunbeam should not be denied the opportunity to ascertain the specific facts through discovery proceedings and examining witnesses who know the facts, nor should a discount house be allowed to defeat a just claim by the simple expedient of defacing the shipping labels on its goods. The facts are peculiarly within the defendant’s knowledge, and we do not think it is aggrieved by the failure of the plaintiff to allege them; the plaintiff would be entitled to employ discovery proceedings and to narrow down the *194issues by an appropriate means provided in the Federal Rules. In short, assuming Sunbeam might be able to prove a right to relief under these general allegations, the lack of a specific allegation of the source and means employed by Masters of Miami is no ground to dismiss the complaint.
Thus, the only real question is whether the public policy of Florida permits such an action.
It is appropriate briefly to review the history of resale-price maintenance or “Fair Trade,” as its supporters style it. The tide of battle over this controversial subject has ebbed and flowed. Condemned in the early cases1 as a restraint of trade violating the Sherman Act,2 the system received approbation in numerous state statutes during the depression of the 1930’s, and in the case of Old Dearborn Distributing Co. v. Seagram-Distillers Corp., 1936, 299 U.S. 183, 57 S.Ct. 139, 81 L.Ed. 109, the Supreme Court held the Illinois Fair Trade law a valid exercise of state police power, not transgressing the due process and equal protection clauses of the Fourteenth Amendment. Congress one year later passed the Miller-Tydings amendment3 in order to except Fair Trade contracts valid under state law from the ban of the Sherman Act. But the triumph of the Fair Trade faction was only apparent, for in 1951, in Schwegmann Bros. v. Calvert Distillers Corp., 341 U.S. 384, 71 S.Ct. 745, 95 L.Ed. 1035, 19 A.L.R.2d 1119, the Supreme Court held that the Miller-Tydings Act validated state legislation only to the extent that it made Fair Trade contracts enforceable inter partes, and that the Sherman Act still precluded state legislation making the price-maintenance arrangement enforceable against non-signers. But the tide shifted again when Congress saw fit to remove this and other federal statutory difficulties standing in the way of Fair Trade legislation by the states, in the McGuire Act4 of 1952; and we held that statute constitutional in Schwegmann Bros. Giant Super Markets v. Eli Lilly & Co., 5 Cir., 205 F.2d 788, certiorari denied 346 U.S. 856, 74 S.Ct. 71, 98 L.Ed. 369. At the present time there seem no longer to be any federal constitutional or statutory barriers to Fair Trade legislation.
However, the state Fair Trade Acts— now numbering 45 — have continued to suffer vicissitudes in the state courts, and in none have they fared worse than in Florida. In Bristol-Myers Co. v. Webb’s Cut-Rate Drug Co., 137 Fla. 508, 188 So. 91, the nonsigner clause of the first Florida Fair Trade Act, Ch. 18395, Acts of 1937, was held unconstitutional as not within the scope of the Act’s title. The legislature responded with another Fair Trade Act in 1939. This Act was held unconstitutional in Liquor Store, Inc., v. Continental Distilling Corporation, Fla., 40 So.2d 371, 388, on the ground that it exceeded the bounds of the legislature’s police power; that is, the power to protect public health, welfare, and morals, because it served the private interest of one economic group to the detriment of the general public.5 *195Later, the legislature passed a third Fair Trade Act, Ch. 25204, Acts of 1949. This Act was in all material respects like that of 1939 except that the legislature affixed a lengthy preamble styled “Findings of Fact” which declared that the Act would serve the public interest and was a lawful exercise of the police power. In Seagram-Distillers Corp. v. Ben Greene, Inc., Fla., 54 So.2d 235, the Supreme Court unanimously held that the nonsigner clause of this act was invalid, applying the rule of the first Schwegmann case, 341 U.S. 384, 71 S.Ct. 745, 95 L.Ed. 1035, 19 A.L.R.2d 1119. After the McGuire Act removed that barrier, the question of constitutionality of the nonsigner clause of the 1949 Act came squarely before the court. In Miles Laboratories, Inc., v. Eckerd, Fla., 73 So.2d 680, 681,6 the court held that the so-called “Findings of Fact” had not cured the defects in the earlier act, and held this act unconstitutional as applied to a nonsigner. The court’s language is notably strong:
“This Court has expressed its views on fair trade and similar acts and has consistently and unequivocally rejected, on constitutional grounds, both the underlying theory and the economic facts on which they are sought to be predicated [citing eight cases]. * * *
“As we have stated before, the real effect of the non-signer clause is anti-competitive price fixing; not the protecting of the good will of trade marked products as other courts have held. Good will, it has been said, should be determined by the price which the goods can command in a competitive market, and not by the ability of the manufacturer to sell at a pegged retail price which he himself selects. * * * Except in times of economic emergency such inflexible price arrangements which the act sanctions are not in line with our traditional concepts of free competition, which have traditionally been the ‘yard stick’ for protection of the consuming public. The real vice of the non-signer clause is the absence of that standard, and the decisions of this Court cited herein so hold. In removing the said standard the non-signer clause must fall as an invalid use of the police power for a private, not a public purpose. Liquor Store, Inc., v. Continental Distilling Corporation, supra.”
The Florida Supreme Court seems to have been more consistently opposed to the Fair Trade Acts on public policy grounds than any other court; however, since Congress has let down the federal bars to such legislation, a growing minority of states have joined Florida in declaring such legislation unconstitutional. Many of the cases are so recent that they are now pending appeal. Union Carbide & Carbon Corp. v. White River Distributors, Ark., 275 S.W.2d 455; Olin Mathieson Chemical Corp. v. Francis, Colo.Dist.Ct., 1955 CCH Trade Cases [[67,984; Grayson-Robinson Stores, Inc., v. Oneida, Ltd., 209 Ga. 613, 75 S.E.2d 161; Cox v. General Electric Co., 211 Ga. 270, 85 S.E.2d 514; Shakespeare Co. v. Lippman’s Tool Shop Sporting Goods, 334 Mich. 109, 54 N.W.2d 268; McGraw Electric Co. v. Lewis & Smith Drug Co., Inc., 159 Neb. 703, 68 N.W.2d 608; General Electric Co. v. Thrifty Sales, Inc., Utah Dist.Ct., 1954 CCH Trade Cases [[67,861.
Now, the appellant Sunbeam Corporation says that the Florida Supreme Court has retreated from its “consistent and unequivocal” opposition, on constitutional grounds, to the Fair Trade Acts, by denying certiorari without opinion in the recent case of Chase & Sherman v. Sunbeam Corp., Circ.Ct. Dade County, *196CCH Trade Cases 5167, 524, certiorari denied, Fla., 73 So.2d 714. In that case the Circuit Court held that a Fair Trade resale-price maintenance contract could be enforced inter partes. But we are not convinced that this really marks a retreat, or that the Supreme Court would not have decided the question differently on the merits. For it seems to us that the constitutional theories repeated in so many of its decisions would be more consistent with declaring the entire Act invalid. And just as denial of certiorari by the United States Supreme Court carries no implication concerning the merits of the case, State of Maryland v. Baltimore Radio Show, 338 U.S. 912, 70 S.Ct. 252, 94 L.Ed. 562, we do not think we are required to regard the Circuit Court decision in the Chase & Sherman case as the law of Florida, in view' of the Supreme Court’s strong and consistent declarations that as a constitutional matter, the public policy of Florida is opposed to this scheme of price maintenance. We think it may well be that Fair Trade contracts are unenforceable in Florida even between the' parties; however, it will be seen that this is unnecessary to our decision'here, and' we do not decide that question. For reasons stated infra, we think the Chase & Sherman decision does not have any important bearing on the 'issue wé are called upon to decide.
The theory of the present complaint, that the defendant is 'guilty of the tort of‘ inducing signers of resale-price maintenance contracts to breach the contracts by selling Fair Traded products to. the defendant, is not a recent innovation. In fact, this was the basis of one of the earliest important cases, Dr. Miles Medical Co. v. John D. Park & Sons Co., 220 U.S. 373, 31 S.Ct. 376, 55 L.Ed. 502. But recently the manufacturers of Fair Traded goods have turned to this theory more often as a result of the growing tendency of state courts to condemn attempts to prevent nonsigners from selling below list prices. They argue, as Sunbeam argues here, that entirely different public policies apply to attempts to prevent nonsigners from bitying Fair Traded products. But in all frankness, we see little merit in the attempted distinction relative to policy. Preventing nonsigners from buying goods diminishes the. scope of competition just as surely as preventing them from selling below list prices, though it is true that it is a more indirect way of accomplishing that object of the Fair , Trade supporters. Nevertheless, some lower courts in states where nonsigner clauses have been struck down as unconstitutional, have accepted this argument and granted injunctions in cases precisely like the one, before us. Argus Cameras, Inc. v. Hall of Distributors, Inc., Mich.Circ.Ct., 1954 CCH Trade Cases 5f67,916; Sunbeam Corporation v. Economy Distributing Co., Inc., D.C.E.D. Mich., 131 F.Supp. 791. And a Florida trial court very recently granted an, injunction of sales at less than Fair Trade prices where it was proved that the non-signing defendants had induced the breach of specific Fair Trade contracts. Union Underwear Co., Inc. v. Rayvis, Circ.Ct. Dade County, 1955 CCH Trade Cases 5168,051. No appeal was taken in that case.
However, we think the decision in the Union Underwear suit was entirely contrary to the rule of public policy set out in case after case by the Florida Supreme Court. We do not find it necessary to decide that Fair Trade contracts are invalid in Florida even between the parties. Appellant’s brief argues that we would have to base any affirmance in this case on such a holding, saying:
"There is no doubt but that interference with the performance of a' lawful contract gives rise to an action against the person interfering with that contract, not only for damages, but also for injunctive relief.”'
We cannot agree with this bald statement. In the field of trade interference, the public interest in maintaining competition quite often may privilege such behavior. See Restatement, Torts,. §§ 766-774. The principle we think determinative ' in the present case is expressed by the Restatement ás follows:
*197“§ 774. Privilege to Break Restriction Violative of Public Policy.
“One is privileged by proper means to induce the non-performance of a contract or bargain, the purpose or effect of which is to restrict his business opportunities in violation of a defined public policy.

“Comment:

“a. The privilege stated in this Section enables a person to protect himself by proper means against restrictions on his business opportunities when the restrictions violate a defined public policy. In some cases such a restriction may be the avowed purpose of the interrupted arrangement; in others this may be the effect, in view of the administration of the arrangement or other circumstances, whether or not it is the purpose. It is not enough, however, that the contract or bargain involved restricts the actor’s business opportunities. Every contract limits in some degree the opportunities of persons not parties to the contract. Such a restriction is ordinarily deemed desirable both in the public and the private interest. However, some restrictions may work prejudice to both interests. Accordingly, contracts in unreasonable restraint of trade are generally unenforceable even against the contracting party. The rule stated in this Section is not limited, however, to such contracts. Though the contract may be enforceable in some manner between the parties, one whose business opportunities are restricted by it may be able to survive only through a, breach of the restriction; and this breach he is privileged to seek by proper means, if the restriction violates public policy.” (Emphasis added.)
The leading case applying the principle of the italicized language is Fairbanks, Morse & Co. v. Texas Electric Service Co., 5 Cir., 63 F.2d 702, where in an opinion by Judge Hutcheson this court held that the prospective builder of a municipal electric plant was justified in soliciting customers of a public utility which had long term contracts with 90 per cent of the users of electricity in every community which it served, to agree to make exclusive three-year contracts with the municipal plant, on grounds of public policy. It is clear that the contracts in that case were enforceable in some manner between the parties. See also Prosser, Torts, 982.
We think this principle is entirely right; in fact, it is a necessary corollary to the adoption of a public policy in such matters. To reverse the judgment in the present case would be to refuse to apply the public policy of Florida as it has most recently been declared by its Supreme Court, which said that it had “consistently and unequivocally rejected, on constitutional grounds, both the underlying theory and the economic facts on which [the Fair Trade Acts] are sought to be predicated.” Miles Laboratories, Inc., v. Eckerd, supra [73 So.2d 681]. It is not for us to change the public policy of Florida, to refuse to apply it, or to find it has changed from such uncertain indications as the denial of certiorari or decisions of lower courts. We think we must affirm the judgment whether we agree with that public policy or not.7
We well realize that Fair Trade is a highly controversial subject among economists and businessmen as well as in the courts. With regard to the economic soundness of the arguments on either *198side, we note with interest that the Report of the Attorney General’s National Committee to Study the Antitrust Laws, published March 31, 1955, is opposed to resale-price maintenance.8 That Report appears to be a very careful study of the economic as well as the legal considerations, and its conclusions may well be influential in the courts as well as Congress. See also Cook, “The Continuing Fair Trade Battle,” 29 St.Johns L.Rev. 66 (1954).
 Since we conclude that, whether or not Fair Trade contracts are enforceable between the parties thereto, the public policy established by the Florida Supreme Court is opposed to actions such as the present one, there is no conceivable way in which plaintiff could prove a right to recover on the allegations of this complaint. Whether the source of supply which Masters of Miami, Inc., enjoys is in Florida, New York (where the Fair Trade Act is valid even against non-signers), or the District of Columbia (which has no Fair Trade Act), no action can be brought in Florida. It is settled law that no foreign tort action contrary to a strong public policy of the forum state can be maintained. Restatement, Conflict of Laws § 612; 11 Am.Jur., “Conflict of Laws” § 183. The Full Faith and Credit clause does not require Florida courts to enforce such a foreign cause of action, if any there is. Cf. Hughes v. Fetter, 341 U.S. 609, 612, 71 S.Ct. 980, 95 L.Ed. 1212.
The judgment appealed from is
Affirmed.

. E. g., Dr. Miles Medical Co. v. John D. Park & Sons Co., 220 U.S. 37S, 31 S.Ct. 376, 55 L.Ed. 502.

. 15 U.S.C.A. §§ 1-7.

. 50 Stat. 693, amending 15 U.S.C.A. § 1.

. 66 Stat. 631, amending 15 U.S.C.A. § 45.

. This case also involved a nonsigner. Three strongly worded separate majority opinions were written. Five of the six justices concurred in each of these, the sixth justice dissenting. In the opinion of Barns, J., an additional reason why the Act was unconstitutional was cited, namely that it offended the equal protection clauses of the federal and state constitutions, U.S.Const. Amend. 14; F.S.A.Const. Declaration of Bights, §§ 1, 12, by making an arbitrary and unreasonable distinction between “vertical” and “horizontal” price-fixing agreements. This was held in spite of the U. S. Supreme Court’s contrary holding on the federal constitutional point in the Old Dearborn case, supra. The opinion of Hobson, J., inveighed strongly against the “selfish interests” supporting such legislation, quoting the words of Cicero against Cataline: “ ‘To what length wilt thou abuse my patience; to what extent *195wilt thy unbridled audacity affront itself?’ ” We note that among these five justices, four are still members of the Supreme Court and constitute a majority thereof.

. Noted in 9 Miami L.Q. 234 and 4 Catholic UX.Rev. 143.

. A strong case could also be made for the proposition that where, as here, extraordinary relief in the nature of the equitable remedy of injunction is sought, the trial court had the duty to weigh the public policy implications with the other factors in determining whether such an action of the nature of a bill in equity would lie. Not every continuing breach of contract entitles the injured party to the intervention of a court of equity.

. A few members of the Committee opposed outright repeal of the Miller-Tyd-ings and McGuire amendments, but the majority of the Committee concluded as follows, Report, p. 154:
“On balance, we regard the Federal statutory exemption of ‘Fair Trade’ pricing as an unwarranted compromise of the basic tenets of National antitrust policy. We recognize that the legislatures of 45 states have at some time accorded official sanction to ‘Fair Trade’ pricing; that the Congress twice deferred to state enactments by creating federal ‘Fair Trade’ exemptions from antitrust prohibitions; and that without federal immunization ‘Fair Trade’ pricing, as a practical matter, cannot survive. Nevertheless, the throttling of price competition in the process of distribution that attends ‘Fair Trade’ pricing is, in our opinion, a deplorable yet inevitable concomitant of federal exemptive laws. Moreover, whatever may be the underlying legislative intent, any operative ‘Fair Trade’ system facilitates horizontal price-fixing efforts on the manufacturing and each succeeding distributive level. And the prominent existence of a federal price-fixing exemption not only symbolizes a radical departure from National antitrust policy without commensurate gains, but extends an invitation for further encroachment on the free-market philosophy that the antitrust laws sub-serve.
“We therefore recommend Congressional repeal both of the Miller-Tydings amendment to the Sherman Act and the McGuire amendment to the Federal Trade Commission Act, thereby subjecting resale-price maintenance, as other price-fixing practices, to those Federal antitrust controls which safeguard the public by keeping the channels of distribution free.”