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The Franchise Memorandum

Posts from December 2015 - Issue 200.
Posted in Antitrust

Collusion with competitors is the most serious form of antitrust risk. Bid rigging and price fixing, for example, are criminal offenses, and individuals receive prison sentences when they engage in such conduct on behalf of their companies. The problem is that it is difficult to tell where legal collaboration ends and collusion starts. Trade association activity provides one case in point. While generally legal, trade associations can lead to competitors working together too closely and ending up in trouble. Worries also arise when competitors discuss a merger or acquisition ...

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Posted in Antitrust

The United States District Court for the Eastern District of Pennsylvania granted some, but not all, of a manufacturer's motion to dismiss antitrust claims brought by a cigar distributor that sells mass-market cigars to convenience stores. Satnam Distr. LLC v. Commonwealth-Altadis, Inc., 2015 WL 5971583 (E.D. Pa. Oct. 14, 2015). Satnam sued a competing distribution company and one of the manufacturers of a particular cigar brand, alleging that the manufacturer provided discounts to the distributor, which allowed the distributor to sell the manufacturer's cigars for less than ...

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Posted in Terminations

The United States District Court for the District of South Dakota recently denied a manufacturer's motion for summary judgment, finding material questions of fact regarding whether it had "just provocation" to terminate the agreement with its distributor. Northern Truck Equip. Co. v. Omaha Standard, LLC, 2015 WL 7274357 (D.S.D. Nov. 16, 2015). The parties' relationship began in the 1980s, when they agreed that Northern Truck would distribute and sell Omaha Standard's truck equipment in South Dakota. In 2012, however, Omaha Standard granted another company the right to sell its ...

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A federal court in Delaware recently granted in part and denied in part a manufacturer's motion for summary judgment, and denied its motion for judgment on the pleadings. TL of Fla., Inc. v. Terex Corp., 2015 WL 5618893 13-2009-LPS (D. Del. Sept. 24, 2015). At issue was whether Terex had made a number of misrepresentations (or failed to disclose a number of pertinent facts) to its distributor, TL, in relation to the parties' distributorship agreement. In particular, in filing suit, TL alleged that Terex had failed to disclose the existence of other distributors near TL, had required TL ...

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A Massachusetts federal court granted in part and denied in part a motion to dismiss claims for breach of the implied covenant of good faith and fair dealing in a distribution contract. Bruno Int'l Ltd. v. Vicor Corp., 2015 U.S. Dist. LEXIS 123556 (D. Mass. Sept. 16, 2015). For nearly 25 years, Bruno had been the exclusive Israeli distributor for Vicor, a Massachusetts supplier of modular power components and power systems. Then, Vicor notified Bruno that it would not renew its exclusive distribution contract. Approximately one month later, the parties signed an agreement providing ...

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Posted in Antitrust

The United States Court of Appeals for the Ninth Circuit recently affirmed a ruling in favor of the largest U.S. retail dealer of musical instruments and guitars, dismissing a class action brought by purchasers of guitars on the grounds that the plaintiffs did not plead sufficient facts to prove an antitrust conspiracy. In re Musical Instruments & Equip. Antitrust Litig., 798 F.3d 1186 (9th Cir. Aug. 25, 2015). The class action plaintiffs alleged that the defendant, Guitar Center, Inc., along with manufacturers Fender, Yamaha, Gibson, Hoshino, and Kaman, engaged in a "hub and spoke ...

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Posted in Antitrust

In a rare post-Leegin case involving resale price maintenance, a federal district court in Florida has refused to dismiss claims brought by retailer Costco against its supplier of contact lenses. Costco Wholesale Corp. v. Johnson & Johnson Vision Care, Inc., No. 3:15- cv-00734 (M.D. Fla. Nov. 4, 2015). Costco alleged that Johnson & Johnson forced it to agree to increase its retail contact lens prices to minimum levels. The resale price maintenance policy was alleged to have followed agreements between Johnson & Johnson and eye doctors who sell contact lenses, and between Johnson & ...

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Posted in Antitrust

The United States Court of Appeals for the Second Circuit has affirmed summary judgment in a price discrimination case in which the plaintiffs were unable to show a significant loss of customers. Cash Sr Henderson Drugs v. Johnson & Johnson, 2015 U.S. App. LEXIS 15162 (2d Cir. Aug. 27, 2015). The case arose because Johnson & Johnson, a pharmaceutical manufacturer, offered rebates and discounts to certain "favored purchasers," resulting in higher prices for retail pharmacies for the same drugs. Because Johnson & Johnson did not contest that it sold name-brand drugs to different ...

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Posted in Terminations

The United States District Court for the District of South Carolina recently denied a terminated distributor's request for a preliminary injunction against a manufacturer and a new distributor. Machinery SoIs., Inc. v. Doosan Corp., 2015 WL 5554357 (D.S.C. Sept. 18, 2015). Doosan and Machinery Solutions were parties to a distribution agreement for the sale and service of new and used Doosan machine tools in North Carolina, South Carolina, and Georgia. Doosan terminated the agreement and entered into a new distribution agreement with Ellison for North Carolina, South Carolina ...

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About this Publication

The Franchise Memorandum is a collection of postings on summaries of recent legal developments of interest to franchisors brought to you by Lathrop GPM LLP. 

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