Santana Products, Inc. v. Bobrick Washroom Equipment, Inc.
69 F. Supp. 2d 678 (1999)
Rule of Law:
There is no implied right to contribution or indemnification for violations of the Sherman Act or the Lanham Act. Furthermore, a settlement release governed by New York law bars a non-settling tortfeasor from seeking contribution from the settling tortfeasor.
Facts:
- Santana Products, Inc. (Santana) manufactured and sold toilet compartments made of high-density polyethylene (HDPE).
- Competitors, including Bobrick Washroom Equipment (Bobrick), allegedly conspired to exclude Santana's products from the market.
- Formica Corporation (Formica), a supplier to Santana's competitors, produced a videotape depicting Santana's HDPE product as highly flammable when lit with a lighter.
- Formica encouraged Bobrick and other competitors to use this videotape in marketing efforts to dissuade potential customers from buying Santana's product.
- Bobrick and other manufacturers allegedly falsely represented to customers that Santana's HDPE partitions were a dangerous fire hazard because they did not meet inapplicable 'wall finish' standards.
- In a prior lawsuit, Formica and other manufacturers settled with Santana, executing a 'Release and Covenant Not to Sue' which specified that it was governed by New York law.
Procedural Posture:
- Santana Products, Inc. sued Bobrick Washroom Equipment and others in the U.S. District Court for the Middle District of Pennsylvania for violations of the Sherman Act, Lanham Act, and tortious interference.
- Bobrick, as a third-party plaintiff, filed a complaint against Formica Corporation seeking contribution and indemnification.
- Formica moved to dismiss Bobrick's third-party complaint.
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Issue:
Does a defendant accused of violating the Lanham Act have an implied federal right to seek contribution from a joint tortfeasor who has already settled with the plaintiff?
Opinions:
Majority - Vanaskie, District Judge
No. A defendant does not have an implied right to contribution under the Lanham Act. The court analyzed the claim using the framework from Texas Industries, Inc. v. Radcliff Materials, Inc. and Northwest Airlines, Inc. v. Transport Workers Union, which requires examining congressional intent. The court found that the Lanham Act's text, legislative history, and overall structure do not support an implied right to contribution. Unlike the judicially created right of action in Musick, Peeler & Garrett, the Lanham Act's right of action was expressly created by Congress, which did not include a provision for contribution. The court also held that even if a right to contribution existed, it would be barred by the settlement release between Santana and Formica. Under New York law, which governs the release, a settling tortfeasor is relieved from liability for contribution to any other tortfeasor. Finally, the court dismissed Bobrick's indemnification claim because the underlying complaint alleged intentional, active misconduct by Bobrick, whereas indemnification is only available for passive tortfeasors whose liability is secondary.
Analysis:
This decision solidifies the prevailing view that, similar to antitrust law, the Lanham Act does not provide for an implied right of contribution among joint tortfeasors. The court's analysis reinforces the distinction between judicially-implied causes of action, where courts may also imply ancillary rights like contribution, and express statutory causes of action, where courts are reluctant to add remedies not specified by Congress. The ruling also highlights the strategic importance of settlement agreements, demonstrating how a choice-of-law provision can effectively shield a settling defendant from subsequent claims by non-settling co-defendants, thereby providing finality.
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