Stewart Glass & Mirror, Inc. v. U.S.A. Glas, Inc.

• Decision Date: 16 September 1996
• Docket Number: No. 1:95-CV-813.,1:95-CV-813.
• Citation: 940 F.Supp. 1026
• Parties: STEWART GLASS & MIRROR, INC., et al., Plaintiffs, v. U.S.A. GLAS, INC., et al., Defendants.
• Court: U.S. District Court — Eastern District of Texas

940 F.Supp. 1026

STEWART GLASS & MIRROR, INC., et al., Plaintiffs, v. U.S.A. GLAS, INC., et al., Defendants.

No. 1:95-CV-813.

United States District Court, E.D. Texas, Beaumont Division.

September 16, 1996.

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Jack Nolan Price, Law Office of Jack N. Price, Austin, TX, J. Thad Heartfield, Jr., Heartfield & McGinnis, Beaumont, TX, David Cohen, Law Office of David Cohen, Austin, TX, for Stewart Glass & Mirror, Inc., Texas Mobil Auto Glass Inc., RLJ Inc., dba A-1 Glass Co., Freddy's Auto Glass & Mirror Inc., Nederland Glass Co. Inc., Lone Star Glass Inc., Auto Glass Specialists Inc., Allied San Jacinto Glass Co.

J. Michael Baldwin, David G. Patent, Baker & Botts, Houston, TX, Robert K. Niewijk, Joel G. Chefitz, Katten Muchin & Zavis, Chicago, IL, for U.S. Auto Glass Discount Centers Inc., U.S.A. Glas, Inc.

David W. Ledyard, Strong Pipkin Nelson & Bissell, Beaumont, TX, Paul Sanders Francis, Baker & Hostetler, Houston, TX, Robert M. Kincaid, Jr., Baker & Hostetler, Columbus, OH, Julie E. Hawkins, Lee H. Simowitz, Gerald A. Connell, Baker & Hostetler, Washington, DC, for Safelite Glass Corp.

Walter Joshua Crawford, Jr., Wells, Peyton, Beard, Greenberg, Hunt & Crawford, Beaumont, TX, Christopher K. Larus, John A. Cotter, Larkin Hoffman Daly & Lindgren Ltd., Bloomington, MN, for Harmon Glass Co., Inc.

David J. Beck, Lonny J. Hoffman, L. Nicole Batey, Beck Redden & Secrest, Houston, TX, Thomas A. Doyle, Donald J. Hayden, Baker & McKenzie, Chicago, IL, for Windshields America, Inc.

MEMORANDUM OPINION AND ORDER GRANTING IN PART AND DENYING IN PART DEFENDANTS' MOTIONS TO DISMISS PLAINTIFFS' SECOND AMENDED COMPLAINT

SCHELL, Chief Judge.

Before the court are Defendants' motions to dismiss Plaintiffs' Second Amended Complaint. Plaintiffs filed a collective response. Thereafter, two Defendants filed replies, and Plaintiffs again filed a response. Upon consideration of the motions, responses, replies, and memoranda of law, this court is of the opinion that Defendants' motions to dismiss should be granted in part and denied in part.

I. BACKGROUND

Plaintiffs have sued Defendants for violations of Sections 1 and 2 of the Sherman Act, tortious interference with existing and prospective contracts, and violation of the Texas Insurance Code, Art. 5.07-1. Plaintiffs and Defendants are competitors in the business of repair and replacement of auto glass, and residential and commercial flat glass. Plaintiffs are eight Texas corporations (hereinafter referred to collectively as "Plaintiffs"). Defendants are four foreign corporations doing business in Texas: U.S.A. Glas, Inc. ("U.S.A. Glas"), Safelite Glass Corp. ("Safelite"), Harmon Glass Company, Inc. ("Harmon"), and Windshields America, Inc. ("Windshields America").

In their Second Amended Complaint, Plaintiffs allege that Defendants conspired with various insurance companies to dominate and control the business of replacement and repair of auto glass and flat glass underwritten by insurance companies in Texas. Pls.' Second Am.Compl. ¶ 7. Plaintiffs allege that Defendants cooperated with one another on many aspects of their business. For the sake of brevity, the court will mention only a few examples. First, Defendants allegedly agreed among themselves to divide and allocate customers and territories. Id. ¶¶ 8, 9(a)-(b). Second, Defendants allegedly exchanged information on many aspects of business operations such as claims, pricing, and costs. Id. ¶¶ 9(c)-(f). Third, Plaintiffs claim that Defendants cooperated in marketing through utilizing computerized-rotating telephone systems and sharing customer service representatives. Id. ¶¶ 9(g)-(1). And fourth, Defendants allegedly agreed to refer business to non-Defendant glass shops only on certain conditions. Id. ¶ 10.

Plaintiffs further allege that Defendants control (1) over fifty percent of the auto glass repair and replacement business underwritten by insurance companies in Texas and (2) over fifty percent of the residential and commercial flat glass repair and replacement business underwritten by insurance companies in Texas. Id. ¶ 11. Plaintiffs allege that this conspiracy by Defendants and unnamed insurance companies has reduced competition and injured Plaintiffs in the form of lost profits. Id. ¶¶ 12, 22. Plaintiffs define the relevant market as the business of repair and replacement of (1) auto glass underwritten by insurance companies in Texas and (2) residential and commercial flat glass underwritten by insurance companies in Texas. Id. ¶ 13.

Plaintiffs allege seven causes of action. In their first cause of action, Plaintiffs allege that Defendants violated Section 1 of the Sherman Act by entering into agreements that unreasonably restrained trade. Id. ¶ 14. In their second cause of action, Plaintiffs allege that Defendants violated Section 2 of the Sherman Act by monopolizing, attempting to monopolize, and conspiring to monopolize the glass repair and replacement market through willfully acquired monopoly power. Id. ¶ 15. In their third cause of action, Plaintiffs allege that Defendants divided and allocated customers in violation of Section 1 of the Sherman Act. Id. ¶ 16. In their fourth cause of action, Plaintiffs allege that Defendants unlawfully boycotted Plaintiffs by denying them referrals from insurance companies. Id. ¶ 17. In their fifth cause of action, Plaintiffs allege that Defendants fixed prices. Id. ¶ 18. In their sixth cause of action, Plaintiffs allege that Defendants tortiously interfered with Plaintiffs' existing and prospective contracts. Id. ¶ 19. In their seventh cause of action, Plaintiffs allege that Defendants violated Article 5.07-1 of the Texas Insurance Code, which prohibits an insurer from limiting its coverage under a policy covering damage to a motor vehicle by limiting the beneficiary of the policy from selecting a person or shop to repair damage to the motor vehicle covered under the policy. Id. ¶ 20.

II. APPLICABLE STANDARDS FOR RULE 12(b)(6)

Rule 12(b)(6) provides that a party may move a court to dismiss an action for "failure to state a claim upon which relief can be granted." On motion under Rule 12(b)(6), the court must decide whether the facts alleged, if true, would entitle the plaintiff to some legal remedy. Conley v. Gibson, 355 U.S. 41, 45-46, 78 S.Ct. 99, 101-102, 2 L.Ed.2d 80 (1957). Dismissal is proper only if there is either (1) "the lack of a cognizable legal theory" or (2) "the absence of sufficient facts alleged under a cognizable legal theory." Balistreri v. Pacifica Police Dept., 901 F.2d 696, 699 (9th Cir.1988). Unless a Rule 12(b)(6) motion is converted to a summary judgment motion, the court cannot consider material outside the complaint. See Powe v. Chicago, 664 F.2d 639, 642 (7th Cir.1981). The court must accept as true all material allegations in the complaint as well as any reasonable inferences to be drawn from them. Kaiser Aluminum & Chem. Sales, Inc. v. Avondale Shipyards, Inc., 677 F.2d 1045, 1050 (5th Cir.1982), cert. denied, 459 U.S. 1105, 103 S.Ct. 729, 74 L.Ed.2d 953 (1983). The well-pleaded facts must be reviewed in the light most favorable to the plaintiff. Piotrowski v. City of Houston, 51 F.3d 512, 514 (5th Cir.1995). A plaintiff, however, must allege specific facts, not conclusory allegations. Elliott v. Foufas, 867 F.2d 877, 881 (5th Cir.1989). Conclusory allegations and unwarranted deductions of fact are not admitted as true. Guidry v. Bank of LaPlace, 954 F.2d 278, 281 (5th Cir.1992). A pleading, however, "need not specify in exact detail every possible theory of recovery — it must only `give the defendant fair notice of what the plaintiff's claim is and the grounds upon which it rests.'" Thrift v. Hubbard, 44 F.3d 348, 356 (5th Cir.1995) (quoting Conley, 355 U.S. at 47, 78 S.Ct. at 102-03). "[A] complaint should not be dismissed for failure to state a claim unless it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief." Conley, 355 U.S. at 45-46, 78 S.Ct. at 102; Kaiser Aluminum, 677 F.2d at 1050. "`The motion to dismiss for failure to state a claim is viewed with disfavor and is rarely granted.'" Id. at 1050 (quoting 5A CHARLES A. WRIGHT & ARTHUR R. MILLER, FEDERAL PRACTICE AND PROCEDURE § 1357 (1969)).

"[Rule 12(b)(6)] must be read in conjunction with Rule 8(a), which sets forth the requirements for pleading a claim in federal court and calls for `a short and plain statement of the claim showing that the pleader is entitled to relief.'" WRIGHT & MILLER, supra, § 1356; see also Thrift, 44 F.3d at 356 n. 13. "[T]he Federal Rules of Civil Procedure erect a powerful presumption against rejecting pleadings for failure to state a claim." Auster Oil & Gas, Inc. v. Stream, 764 F.2d 381, 386 (5th Cir.1985). "Rule 8 fosters that policy by sweeping aside the hypertechnical pleading rules that once defeated many an unwary but meritorious claimant." Id. "A plaintiff's complaint ordinarily need only be a short and plain statement that gives the defendant notice of what the claim is and the grounds upon which it rests." Colle v. Brazos County, 981 F.2d 237, 243 (5th Cir.1993). "Rule 8 indicates that a complaint need only set out a generalized statement of facts from which defendant will be able to frame a responsive pleading." WRIGHT & MILLER, supra, § 1357.

III. DISCUSSION

The issue for determination is whether Plaintiffs have alleged sufficient facts for their antitrust and state law theories of recovery. Defendants collectively make a number of arguments that Plaintiffs have failed to state a claim upon which relief can be granted. First, Defendants argue that Plaintiffs lack standing to bring this antitrust action because their complaint fails to allege that they suffered "antitrust injury" from Defendants' acts. Second, Defendants argue that Plaintiffs have not alleged facts showing that any Defendant possesses or has...