A federal court in California recently rejected federal and state antitrust price discrimination claims brought by several wholesalers of 5-hour Energy drinks, finding that the plaintiffs failed to demonstrate competitive injury. U.S. Wholesale Outlet & Distrib., Inc. v. Living Essentials, LLC, 2025 WL 1513438 (C.D. Cal. May 28, 2025).
The plaintiffs, wholesale businesses that sold 5-hour Energy, alleged that Living Essentials, the manufacturer and distributor of 5-hour Energy, engaged in unlawful price discrimination by offering Costco better prices and promotional terms, in violation of Section 2(d) of the Robinson-Patman Act. The plaintiffs also brought a derivative claim under California’s Unfair Competition Law based on the same allegations, and requested a permanent injunction requiring Living Essentials to allow plaintiffs to participate in the same promotional programs and payments that it offered to Costco. Although the court initially denied plaintiffs relief on all of their claims in 2021, the case was eventually vacated in part and remanded by the Ninth Circuit because it concluded the court erroneously concluded that the parties operated at different functional levels in the distribution chain.
On remand, the district court found that Living Essentials provided Costco with promotional allowances (such as advertising, endcap, and in-store displays) that were not made available to plaintiffs on proportionally equal terms, despite the fact that the parties competed at the same level of distribution and within the same geographic markets. Nevertheless, the court still rejected plaintiffs’ claim because it concluded that they had failed to show the requisite antitrust injury and therefore could not prevail on a price discrimination claim. Specifically, the court noted there was no evidence that Costco used the promotions to divert sales from the plaintiffs, nor was there sufficient evidence that the plaintiffs were forced to lower their prices to unprofitable levels in order to compete. Because the Robinson-Patman claim failed, the UCL and injunctive relief claims, which were predicated on the same conduct, also failed.