Roland Machinery Co. v. Dresser Industries, Inc.

749 F.2d 380 (1985)

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Roland Machinery Co. v. Dresser Industries, Inc.

United States Court of Appeals for the Seventh Circuit
749 F.2d 380 (1985)

  • Written by Heather Whittemore, JD

Facts

Roland Machinery Co. (Roland) (plaintiff) was a construction-equipment dealer in Illinois. Roland signed a dealership agreement with Dresser Industries, Inc. (Dresser), which did not include an exclusive-dealing clause forbidding Roland from selling equipment manufactured by Dresser’s competitors. Later, Roland signed a dealership agreement with Komatsu, another construction-equipment manufacturer. After learning of Roland’s agreement with Komatsu, Dresser terminated its agreement with Roland. Roland sued Dresser in federal district court, alleging Dresser violated § 3 of the Clayton Act by implying an exclusive-dealing arrangement between the two companies. Roland moved for a preliminary injunction. Roland argued that the sudden termination of its agreement with Dresser would bankrupt it. Half of Roland’s revenue was derived from Dresser products—10 percent of Roland’s revenue came from sales of new Dresser equipment, and the remaining Dresser revenue came from rental income. Opposing the motion, Dresser argued that it terminated its agreement with Roland because it believed that Roland intended to become an exclusive Komatsu dealer and it feared that while Roland carried its products, no other equipment dealer would carry its products. Dresser supported its argument by presenting evidence that exclusive dealing was the usual practice in the construction-equipment market and that dealers generally did not carry competing brands. The district court granted Roland a preliminary injunction, finding that the termination of the contract would likely cause Roland to go out of business and that Dresser implied an exclusive-dealing arrangement between the two companies that might violate the Clayton Act. Dresser appealed.

Rule of Law

Issue

Holding and Reasoning (Posner, J.)

Dissent (Swygert, J.)

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