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Antitrust Keyed to Morgan, 7th Ed.
Polk Bros., Inc. v. Forest City Enterprises, Inc.
Citation:
776 F.2d 185 (1985)Facts
In 1972, Polk Bros. (which sold appliances and home furnishings) and Forest City (which sold building materials and tools) agreed to build a joint retail facility in Burbank, Illinois. Polk constructed a single building partitioned internally with separate entrances for each store, with a common parking lot. The parties negotiated a covenant restricting the products each could sell – Forest City promised not to sell “major appliances and furniture,” while Polk agreed not to sell building materials, tools, and other products that were Forest City’s specialty. The covenant was to run with the land for 50 years.
From 1975 to 1983, the parties generally adhered to the agreement, though Polk covertly sold some Toro products (lawn mowers and snowblowers) from a back room, violating its covenant. In January 1983, under new management, Forest City informed Polk it considered the covenant invalid and began selling appliances. Polk sought an injunction to enforce the covenant. The district court denied relief, finding the covenant was a per se violation of Illinois antitrust law and that Polk’s own violations of the covenant barred equitable relief under the “unclean hands” doctrine.
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