Eastern Dental Corp. v. Isaac Masel Co.
502 F. Supp. 1354 (1980)
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Rule of Law:
A relevant product submarket for a monopolization claim under § 2 of the Sherman Act can be defined by a specific method of distribution, such as wholesale, creating an issue of fact for trial even if the defendant has a negligible share of the overall product market.
Facts:
- Eastern Dental Corporation (EDC) was a distributor of orthodontic products.
- Isaac Masel Co., Inc. (Masel), a manufacturer and distributor, supplied EDC with certain products, including facebows, at wholesale prices from 1973 onwards.
- The parties conducted business for four years without a comprehensive written agreement, operating on the basis of invoices and statements.
- In July 1977, EDC began to manufacture its own elastics, a product it had previously purchased from Masel, thereby becoming a competitor.
- In September 1977, Masel's president discussed the possibility of acquiring EDC, but EDC's shareholders rejected the proposal.
- On August 10, 1978, Masel sent a letter to EDC terminating their business relationship, citing that it was too busy to handle such accounts profitably.
- Following the termination, EDC was unable to find any other manufacturer willing to supply it with facebows or metal bases at wholesale prices.
Procedural Posture:
- Eastern Dental Corporation (EDC) filed suit against Isaac Masel Co., Inc. (Masel) in the United States District Court for the Eastern District of Pennsylvania.
- The complaint alleged claims for monopolization and attempted monopolization under § 2 of the Sherman Act, breach of a requirements contract, and breach of warranty.
- Jurisdiction was based on federal question for the antitrust claims and diversity of citizenship for the state law claims.
- Masel moved for partial summary judgment on the antitrust claims, the breach of contract claim, and on the recoverability of damages for loss of goodwill.
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Issue:
Does a manufacturer's refusal to continue supplying a distributor create a genuine issue of material fact for a monopolization claim where the manufacturer is allegedly the sole source for that product at a wholesale price, thus potentially controlling a narrowly defined 'wholesale submarket'?
Opinions:
Majority - Luongo, J.
Yes. A genuine issue of material fact exists for the monopolization claim because a relevant product submarket can be defined by a specific method of distribution. While Masel's share of the overall facebow market is less than 1%, EDC has presented evidence that Masel was the only manufacturer that sold facebows through wholesale distribution channels. Citing 'Brown Shoe Co.', the court reasoned that 'practical indicia' such as distinct customers, prices, and specialized vendors can define a submarket. A factfinder could infer from the evidence that the industry recognized a distinct 'wholesale facebow submarket.' If this submarket exists, Masel would control 100% of it, which is sufficient to establish monopoly power. Furthermore, there is a genuine issue of material fact regarding Masel's motive for the termination, which could satisfy the 'willful maintenance' element of a monopolization claim, especially given its timing relative to EDC's entry into manufacturing. Therefore, summary judgment on the monopolization claim is denied.
Analysis:
This decision is significant for its application of the 'submarket' doctrine in antitrust law. It demonstrates that a plaintiff can survive summary judgment on a monopolization claim by narrowly defining the relevant market based on a specific distribution channel, even if the defendant is a very small player in the broader product market. This precedent allows smaller distributors to challenge suppliers who may leverage control over a unique supply channel (like wholesale) to engage in anticompetitive conduct. The ruling reinforces that motive and intent are key factual questions in antitrust cases, making summary judgment difficult when there is evidence of retaliatory or exclusionary conduct.
