Perma Life Mufflers, Inc. v. International Parts Corp.

United States Supreme Court

392 U.S. 134

Perma Life Mufflers, Inc., et al.  v.  International Parts Corp. et al.

Certiorari to the United States Court of Appeals for the Seventh Circuit

No. 722.  Argued: April 22-23, 1968 --- Decided: June 10, 1968

Petitioners, dealers who had operated "Midas Muffler Shops," brought this antitrust action for treble damages against respondent Midas, Inc., its parent corporation (International), two other subsidiaries, and corporate officers and agents, charging an illegal conspiracy in violation of § 1 of the Sherman Act, and violations of § 3 of the Clayton Act and § 2 as amended by the Robinson-Patman Act. Petitioners attacked provisions of the sales agreements which they had made with Midas including those which barred petitioners from purchasing from other sources, prevented them from selling outside designated territories, tied muffler sales to other Midas-line products, and required petitioners to sell at fixed retail prices. The District Court entered summary judgment for respondent. The Court of Appeals reversed the judgment on the Robinson-Patman claim but affirmed the District Court's ruling that petitioners' other claims were barred by the doctrine of in pari delicto, noting that petitioners, with full knowledge of the restrictions, had enthusiastically sought and enormously profited from the Midas franchises and had sought additional franchises. The court also held that petitioners' Sherman Act claim was barred because Midas and International were part of a single business entity and therefore entitled to cooperate without creating an illegal conspiracy.

Held:

1. There is nothing in the language of the antitrust laws indicating a congressional intent that the doctrine of in pari delicto should constitute a defense to a private antitrust action, and such application of the doctrine would undermine the important function performed by the private antitrust action in enforcing the antitrust laws. Pp. 138-140.

2. The record refutes respondents' argument that petitioners actively participated in formulating the restrictive plan and encouraged its continuation. Pp. 140-141.

3. Common ownership does not relieve separate corporate entities of the obligations which the antitrust laws impose; and in any event petitioner can charge a combination between Midas and himself or other acquiescing franchisees. Pp. 141-142.

376 F. 2d 692, reversed and remanded.

Robert F. Rolnick argued the cause for petitioners. With him on the briefs were Raymond R. Dickey and Bernard Gordon.

Glenn W. McGee argued the cause for respondents. With him on the brief were John T. Chadwell, David J. Gibbons, John C. Berghoff, Jr., David Silbert, and Jay Erens.

Notes