Northwest Wholesale Stationers, Inc. v. Pacific Stationery & Printing Co.

472 U.S. 284 (1985)

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Nature of the Case

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Facts

D is a wholesale purchasing cooperative whose membership consists of office supply retailers. Nonmember retailers can purchase supplies from D at the same price as members, but D annually distributes its profits to members in the form of a percentage rebate. Members effectively purchase supplies at a price significantly lower than do nonmembers. D also provides certain warehousing facilities. The cooperative arrangement permits the participating retailers to achieve economies of scale in purchasing and warehousing that would otherwise be unavailable to them. In fiscal 1978 D had $ 5.8 million in sales. P sells office supplies at both the retail and wholesale levels. Its total sales in fiscal 1978 were approximately $7.6 million. P became a member of D in 1958. In 1974 D amended its bylaws to prohibit members from engaging in both retail and wholesale operations. A grandfather clause preserved P's membership rights. P’s controlling ownership changed hands without notification to D, in violation of membership rules. D expelled P from membership without any explanation, notice, or hearing. P brought suit alleging a group boycott that limited its ability to compete and should be considered per se violative of § 1 of the Sherman Act. The District Court rejected application of the per se rule and held instead that rule-of-reason analysis should govern the case. Finding no anticompetitive effect, the court granted summary judgment for D. The Court of Appeals reversed, in that D had not provided any procedural safeguards, the expulsion of P was not shielded by § 4 and therefore constituted a per se group boycott in violation of § 1 of the Sherman Act. The District Court rejected application of the per se rule and held instead that rule-of-reason analysis should govern the case. Finding no anticompetitive effect, the court granted summary judgment for D. The Court of Appeals reversed, in that D had not provided any procedural safeguards, the expulsion of P was not shielded by § 4 and therefore constituted a per se group boycott in violation of § 1 of the Sherman Act. The Supreme Court granted certiorari.