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The Franchise Memorandum

Dealer Price Discrimination Claim Dismissed
Posted in Antitrust

A federal court in Iowa last week dismissed with prejudice a dealer’s price discrimination claim made under the Robinson Patman Act (“RPA”). Sioux City Truck & Trailer, Inc. v. Ziegler, Inc., No. 16-cv-4106 (N.D. Iowa Dec. 5, 2016). Gray Plant Mooty represented the supplier in this case. The dealer had been party to an engine parts and service agreement, which was terminated by the supplier, Ziegler, earlier this year. Ziegler tendered a new contract that would have allowed Sioux City Truck & Trailer (“SCTT”) to buy parts, but not to be a “full service” dealer. SCTT refused to sign the new agreement and sued on the theory that the cost of parts would be higher under the new contract than what it had paid as a full service dealer, and presumably higher than what other full service dealers paid. SCTT never bought any parts from Ziegler after the old contract was terminated.

In granting dismissal of the price discrimination claim, the court noted that the RPA prohibits sales to different customers at different prices; an offer to sell to one customer at a higher price does not count. The court rejected all of SCTT’s arguments and authorities for exceptions to the “two purchaser” rule. Accordingly, because Ziegler merely proposed the new contract and the presumably higher prices, SCTT could not meet the statutory requirements for a cause of action. The court did not even need to address the other requirements of a federal price discrimination claim.

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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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