Hudson Distributors, Inc. v. Eli Lilly & Company

PETITIONER: Hudson Distributors, Inc.
RESPONDENT: Eli Lilly & Company
LOCATION: New York Times Office

DOCKET NO.: 490
DECIDED BY: Warren Court (1962-1965)
LOWER COURT:

CITATION: 377 US 386 (1964)
ARGUED: Apr 29, 1964 / Apr 30, 1964
DECIDED: Jun 01, 1964

Facts of the case

Question

Media for Hudson Distributors, Inc. v. Eli Lilly & Company

Audio Transcription for Oral Argument - April 29, 1964 in Hudson Distributors, Inc. v. Eli Lilly & Company

Audio Transcription for Oral Argument - April 30, 1964 in Hudson Distributors, Inc. v. Eli Lilly & Company

Earl Warren:

Hudson Distributors, Inc., versus Eli Lilly & Co.

Mr. Krotinger.

Myron N. Krotinger:

Thank you, Your Honor.

Mr. Chief Justice and members of the Court, if the Court please.

This case is a companion case to the Upjohn case.

It has some different aspects.

Its history and how it arose, follow in many respects the Upjohn litigation following the effectiveness of the Ohio Fair Trade Act or, rather, its passage in June of 1959.

On October 1st, 1959, Hudson was nullified by Eli Lilly & Co. that Eli Lilly will continue to vigorously support fair trade and which is to give you notice of this policy.

This letter invited Hudson to enter into a contract.

This invitation was to -- was not taken up and on December 10th, 1959, a warning letter was sent from Eli Lilly to Hudson informing of the information that's come to Eli Lilly of sales below fair trade prices, again, enclosing duplicate copies of the fair trade agreement, enclosing "We trust your future operations will be strictly in accordance with the obligations imposed upon you under the Ohio Fair Trade Act so there will be no need -- occasion for any further controversy or litigation."

The -- Hudson filed its petition for a declaratory judgment on the 22nd of October, 1959.

This was followed by this warning letter and then by a second warning letter of January 26th, 1960 in which Hudson was told, "We are prepared to file suits for injunctions where contract violations cannot be worked out in a voluntary basis and we trust your future operations will be in accordance with your obligations under the contracts and under the Ohio Fair Trade Act."

In other words, the demand was made that Hudson observe both the provisions of the Ohio -- rather, of the Lilly contract, as well as the fair trade pricing.

As in Upjohn, a cross-petition was filed.

Responsive pleadings were filed both to the petition and the cross-petition, and the case moved into a courtroom.

Unlike Upjohn, in this case, there was a stipulation of facts and evidence.

Again, like Upjohn, the litigation on the Hudson pleading -- rather, on the complex of pleadings was limited solely to the petition, the answer and the reply.

The rulings made by the courts below, the Court of Common Pleas, the Court of Appeals, the Highest Court of Ohio were all made in the -- both cases as written by the Court.

And as stated to the Court yesterday, the issues before the courts were limited to the constitutionality of the statute under the State and the Federal Constitutions.

Now, Your Honors, as we noted yesterday, the Supreme Court of Ohio limited and placed its ruling solely upon the issues of the State of Ohio Constitution.

It's as if the federal law did not exist and we believe that the Supreme Court of Ohio was misled or, at least, adopted the positions set forth both by Upjohn and by Lilly in their briefs, excuse me, namely, that the federal law had nothing to do with the legality of the Ohio Fair Trade Act.

This position was taken both by Lilly and by Upjohn forthrightly in the court below, and net result was that we have a situation where, in the brief of Eli Lilly & Co. in this Court, the claim is made that a valid contract was instituted under the Ohio Fair Trade Act under Section 5 (a) (2).

Seven pages of the Lilly brief in this Court are devoted to that proposition.

In fact, Your Honors, at page 48, 48 or 49 of the Lilly brief in this Court, Lilly argues such a contract is within the common law meaning of a contract that is, under Section 1333.31, an implied contract.

Williston states that a contract may arise from a “sellers making a general offer to all the world in this way to be accepted by taking ownership on the property, provided consideration could be found from the promise of the purchaser and also, such communication to the promisee as is necessary for a contract.”

The next sentence of this section of Williston which deals with notices on merchandise is to the effect, if the ultimate purchase is not from the offeror but from one who has acquired from him absolute and unqualified ownership, it would seem impossible to treat the purchase of the property as consideration for a promise of the purchaser to the original seller, unless it leads to the facts warranting the assumption that the immediate seller demanded, as part of the consideration of the sale, a promise to the original seller.

Arthur J. Goldberg:

(Inaudible)

Myron N. Krotinger:

Only if the federal law so-permits, Your Honor.

Under Section 5 (a) (2), this Court has held and has plainly held repeatedly that the words “contracts and agreements” in the McGuire Act are to be taken in their ordinary and usual meaning.

In the ordinary and usual meaning of the term, Mr. Justice Goldberg, a notice is not a contract.