Menu
Blog Banner Image

The Franchise Memorandum

Claim For Inducing Price Discrimination Dismissed Because Complaint Failed to Allege Sufficient Knowledge of Price Difference
Posted in Antitrust

A federal court in New Jersey recently dismissed a claim for inducing price discrimination between competing distributors, but granted the plaintiff leave to file an amended complaint with additional factual allegations. Marjam Supply Co. v. Firestone Bldg. Prods. Co., 2014 U.S. Dist. LEXIS 158217 (D.N.J. Nov. 7, 2014). Marjam, a distributor of Firestone products, filed suit against the manufacturer of roofing systems and products, as well as against various competing Firestone distributors, for price discrimination violations under the Robinson-Patman Act. Firestone terminated Marjam's distribution agreement after a precipitous fall in sales in 2010 and 2011. Marjam alleged that its sales fell because it was unable to compete with the unlawfully low prices Firestone offered to co-defendants ABC Supply Co. and New Castle Building Products. ABC and New Castle moved to dismiss Marjam's claim that they induced price discrimination from Firestone by knowingly accepting lower prices than Firestone charged Marjam.

The court concluded that Marjam had established antitrust standing because it alleged that ABC and New Castle violated antitrust law, that the violation resulted in Marjam's loss of its Firestone distributorship, and that the loss of that distributorship thereby reduced competition among Firestone distributors. But the court ruled that Marjam had not established a plausible claim for inducing price discrimination, which requires that the defendants knew they were receiving a lower price than a competitor, and the seller would have little likelihood of justifying that lower price. The court concluded that the complaint did not meet the first requirement. Nowhere in the complaint did Marjam allege that either ABC or New Castle was aware of the prices Marjam paid to Firestone. Because the Robinson-Patman Act does not forbid a buyer from bargaining for the best price it can get from a manufacturer, the court dismissed the claim against ABC and New Castle. Based on the plaintiff's claim to have learned subsequently of correspondence between New Castle and Firestone that might support its inducement allegation, the court ruled that Marjam could file an amended complaint.

Email LinkedIn Twitter Facebook

The information contained in this post is provided to alert you to legal developments and should not be considered legal advice. It is not intended to and does not create an attorney-client relationship. Specific questions about how this information affects your particular situation should be addressed to one of the individuals listed. No representations or warranties are made with respect to this information, including, without limitation, as to its completeness, timeliness, or accuracy, and Lathrop GPM shall not be liable for any decision made in connection with the information. The choice of a lawyer is an important decision and should not be based solely on advertisements.

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. 

To subscribe to monthly emails for The Franchise Memorandum, please click here

Topics

Archives

2022

2021

2020

2019

2018

2017

2016

2015

2014

2013

2012

2011

2010

2009

2008

Blog Authors