Allied Accessories and Auto Parts Co., Inc. v. General Motors Corp., 88-1760

• Decision Date: 26 April 1990
• Docket Number: No. 88-1760,88-1760
• Citation: 901 F.2d 1322
• Parties: 1990-1 Trade Cases 69,002 ALLIED ACCESSORIES AND AUTO PARTS CO., INC., Plaintiff-Appellee, v. GENERAL MOTORS CORPORATION, Defendant-Appellant.
• Court: U.S. Court of Appeals — Sixth Circuit

Page 1322

901 F.2d 1322

1990-1 Trade Cases 69,002

ALLIED ACCESSORIES AND AUTO PARTS CO., INC., Plaintiff-Appellee, v. GENERAL MOTORS CORPORATION, Defendant-Appellant.

No. 88-1760.

United States Court of Appeals, Sixth Circuit.

Argued April 14, 1989.

Decided April 26, 1990.

Jerome D. Frank (argued), Seyburn, Kahn, Ginn, Bess & Howard, Southfield, Mich., for plaintiff-appellee.

Lawrence E. Elder, Martin S. Hyman, Irving Scher (argued), Weil, Gotshal & Manges, New York City, Francis H. Dunne, Judith A. Zakens, General Motors Corp., Office of the General Counsel, Detroit, Mich., for defendant-appellant.

Before JONES, WELLFORD and GUY, Circuit Judges.

NATHANIEL R. JONES, Circuit Judge.

The defendant-appellant, General Motors Corporation ("GM") appeals from the district court's judgment in this price discrimination action filed pursuant to the Robinson-Patman Price Discrimination Act, 15 U.S.C. Sec. 13(a) (1982). For the reasons which follow, we affirm.

I.

The plaintiff-appellee, Allied Accessories and Auto Parts Company, Inc. ("Allied"), is a wholesale distributor of automobile parts and accessories to mass merchandiser retailers. During the years 1972 to 1979, one of Allied's largest retail customers was the K Mart Corporation ("K Mart"). However, Allied had only once, for a few months, sold oil filters to K Mart. Prior to 1978, Campbell Filter Company ("Campbell") had supplied K Mart with oil filters manufactured by Campbell and sold under the K Mart name. Campbell also manufactured the Fram oil filters that K Mart sold.

In 1978, K Mart decided to change its marketing of oil filters. It switched to a policy of selling Original Equipment Manufacturer ("OEM") filters, i.e., oil filters manufactured by automobile companies for the cars they build. K Mart had a policy of buying directly from manufacturers whenever possible, since that was usually the way to get the lowest price. For some reason, however, GM could not sell the AC-Delco oil filters manufactured for GM cars directly to K Mart. Instead, GM signed a contract with Campbell allowing Campbell to purchase AC-Delco oil filters for the sole purpose of supplying K Mart. This agreement provided Campbell with a price discount of 10 percent below warehouse distributor prices. This discount was not made available to Allied.

Several companies submitted bids to K Mart for supplying AC-Delco oil filters. The lowest bid was submitted by Campbell, and the second-lowest bid was submitted by Allied. The bid that was submitted by Campbell was 10 percent lower than plaintiff's bid. K Mart subsequently chose Campbell as its supplier for AC-Delco oil filters. Allied brought suit in federal district court, alleging that GM's discount to Campbell violated the Robinson-Patman Price Discrimination Act, 15 U.S.C. Sec. 13(a). The district court agreed with Allied's assertion that GM charged different prices for the same goods. The court also agreed that Allied and Campbell were competitors, "since Campbell was stepping outside of its prior posture as a manufacturer and becoming a supplier, and offering to supply the same product to K Mart as was plaintiff." J. App. at 46. However, the district court did not find GM liable under the Act. The district court first rejected Allied's contention that it would have been selected as K Mart's supplier "but for" the difference in price between Allied and Campbell. J. App. at 47-52. The district court found that price was not K Mart's sole consideration in choosing a supplier, since K Mart's policy was to stay with an established vendor. However, in the event a lower price was offered by a new vendor, K Mart's policy was to go back to the established vendor to see if the new price could be met. Id. Because K Mart had previously only dealt with oil filter manufacturers, the district court reasoned that only a manufacturing company like Campbell could be an "established vendor" for the purposes of this policy. Thus, although a great deal of testimony pointed to price as K Mart's primary consideration, the district court held that an established vendor like Campbell would have had an advantage even if its bidding price had not been lower.

In addition to finding that GM's price discrimination was not the sole cause of Allied's failure to win the K Mart contract, the district court also found that Allied had not provided sufficient proof with regard to damages. The district court stated:

Taking into account defendant's assertions of inaccuracies and inability to reflect true damages, the Court concludes that an accurate finding of damages would be merely speculative. The Court is unable to determine a proper allocation of plaintiff's operating expenses, a proportionately fair reduction occasioned by defendant's lower price discount in 1981, and an accurate determination of lost profits. The Court therefore declines to find that damages are ascertainable.

Thus, the district court concluded that Allied had established neither liability nor damages under the Robinson-Patman Price Discrimination Act.

In an opinion dated July 23, 1987, this court reversed the district court's decision. Allied Accessories and Auto Parts Co., Inc. v. General Motors Corp., 825 F.2d 971 (6th Cir.1987) ("Allied I "). Addressing the causation standard to be applied in Robinson-Patman Price Discrimination Act cases, this court held that "the district court was incorrect in its assumption that Allied must show that GM's price discrimination was the sole cause of its failure to receive the K Mart account." Id. at 973 (emphasis in original). Rather, "in order to demonstrate damage under [the Act], 'it is enough that the illegality is shown to be a material cause of the injury....' " Id. (quoting Zenith Corp. v. Hazeltine, 395 U.S. 100, 114 n. 9, 89 S.Ct. 1562, 1571 n. 9, 23 L.Ed.2d 129 (1969)) (emphasis in original). In addition, the Allied I court held that the district court had applied too strict a standard for determining damages, and that both parties had "clearly presented evidence sufficient for the determination of damages." Id. at 974-75. Thus, the Allied I court reversed the district court's decision, remanding the case for a proper application of the governing legal standards.

On remand, the district court determined that GM's price discrimination was a "material cause" of Allied's failure to obtain the K Mart account, and proceeded to award $1,351,814.58 in treble damages, as required under the antitrust laws. Regarding the causation question, the district court stated:

Assuming that Campbell and Allied offered the filters to K Mart at the same price, several factors favor the selection of Allied over Campbell as K Mart's supplier. These factors lead to the conclusion that the ten percent discount that GM provided to Campbell was a material factor in K Mart's rejection of Allied's bid.

* * * * * *

Since K Mart was only retailing an OEM line in the east, the location of the supplier's warehouses would affect K Mart's access to the merchandise. Allied maintains warehouses in Michigan, New Jersey, Pennsylvania and Atlanta.... Campbell operates out of its main office in Oklahoma, with shipping locations in Missouri and Utah.... Thus, the location of Allied's warehouses in the east supports the selection of Allied over Campbell as K Mart's supplier in the east.

Moreover, Allied's ability to deliver smaller shipments in shorter periods of time also improved its desirability as a supplier. Allied's delivery system enabled Allied to deliver any quantity of merchandise within two days receipt of an order for the merchandise.... Campbell would drop-ship merchandise to individual stores only on orders of 150 pounds or more and would need thirty days for delivery.

Finally, there is ample evidence that the price at which K Mart could purchase the filters was K Mart's primary consideration in awarding the supplier contract....

Therefore, considering all factors, it is this Court's reasoned judgment that the ten percent lower price, which Campbell could offer because of the GM discount, materially affected K Mart's selection of its supplier of AC-Delco oil filters.

J. App. at 178-79 (emphasis added).

Regarding damages, the district court used Allied's "damage study" as a starting point. That study postulated that absent GM's price discrimination, Allied would have sold AC-Delco oil filters to K Mart at Allied's bidding price. However, the district court reduced Allied's damage figure by some $500,000.00 to arrive at a benchmark damage estimate of $450,604.86. J. App. at 182-87. The court then...