Bob Nicholson Appliance, Inc. v. Maytag Co.

• Decision Date: 15 September 1994
• Docket Number: No. NA 91-131 C.,NA 91-131 C.
• Citation: 883 F. Supp. 321
• Parties: BOB NICHOLSON APPLIANCE, INC., Plaintiff, v. MAYTAG COMPANY, Defendant.
• Court: U.S. District Court — Southern District of Indiana

883 F. Supp. 321

BOB NICHOLSON APPLIANCE, INC., Plaintiff, v. MAYTAG COMPANY, Defendant.

No. NA 91-131 C.

United States District Court, S.D. Indiana, New Albany Division.

September 15, 1994.

James E. Fifer, Mark B. Geller, New Albany, IN, for plaintiff.

David W. Crumbo, Mary Ann Guenther, New Albany, IN, Kenneth J. Tuggle, Brown Todd & Heyburn, Louisville, KY, for defendant.

ENTRY

BARKER, Chief Judge.

The Maytag Company ("Maytag") moves for summary judgment on Bob Nicholson Appliance, Inc.'s ("BNA") Second Amended Complaint. For the reasons stated below, we grant Maytag's motion for summary judgment as to all counts.

I. BACKGROUND

BNA, an Indiana corporation, sells home appliances at retail in New Albany, Indiana. Maytag, a Delaware corporation, manufactures and distributes home appliances. From 1979, up to November, 1990, BNA (and its predecessor, the sole proprietorship, Bob Nicholson Appliance) purchased home appliances from Maytag pursuant to several Retail Dealer Agreements ("RDA"s). See Second Amended Complaint, Count I, ¶ 3. In November, 1990, citing a decline in BNA's sales, Maytag cancelled its RDAs with BNA.

BNA claims that Maytag had quantity discount pricing programs (hereinafter "Super Value Program"), through which selected dealers had the opportunity to buy certain models of home appliances from Maytag at prices below what BNA would normally pay to buy the same quality appliances. BNA further maintains that it repeatedly told Maytag that it wanted to participate in the Super Value Program if it received the same pricing. See Second Amended Complaint, Count I, at ¶ 10. According to BNA, Maytag repeatedly refused to provide any information about the Super Value Program and failed to give BNA any opportunity to participate even though BNA met the requisite criteria.

BNA's Second Amended Complaint alleges five counts: Count I alleges that Maytag violated 15 U.S.C. § 13¹ (the Robinson-Patman Act) by engaging in price discrimination; Count II alleges that Maytag made fraudulent representations regarding the existence of and BNA's eligibility for the Super Value Program; Count III alleges that May-tag violated 15 U.S.C. § 1 (the Sherman Anti-Trust Act) by engaging in illegal tie-in arrangements; Count IV alleges that Maytag breached its retail dealer agreements with BNA.² BNA claims that it is entitled to various damages including lost profits and treble damages under 15 U.S.C. § 15 (Section 4 of the Clayton Act).³

II. DISCUSSION

A. Summary Judgment Standard

Under Rule 56(c) of the Federal Rules of Civil Procedure, summary judgment is proper "if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." Fed.R.Civ.Proc. 56(c). While the burden rests squarely on the party moving for summary judgment to show "that there is an absence of evidence to support the nonmoving party's case", Celotex Corp. v. Catrett, 477 U.S. 317, 325, 106 S.Ct. 2548, 2554, 91 L.Ed.2d 265 (1986), the nonmoving party responding to a properly made and supported summary judgment motion still must set forth facts showing that there is a genuine issue of material fact and that a reasonable jury could return a verdict in its favor. See Wolf v. City of Fitchburg, 870 F.2d 1327, 1329 (7th Cir.1989); Posey v. Skyline Corp., 702 F.2d 102, 105 (7th Cir.1983), cert. denied, 464 U.S. 960, 104 S.Ct. 392, 78 L.Ed.2d 336 (1983). "The moving party is `entitled to a judgment as a matter of law' if the nonmoving party has failed to make a sufficient showing on an essential element of her case with respect to which she has the burden of proof." Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106 S.Ct. 2548, 2252, 91 L.Ed.2d 265 (1986). If doubts remain, however, as to the existence of a material fact, then those doubts should be resolved in favor of the nonmoving party and summary judgment denied. See Wolf, 870 F.2d at 1330.

Although the general rule is that a court must draw all inferences in favor of the nonmoving party, Eastman Kodak Co. v. Image Technical Services, Inc., 504 U.S. 451, 456-58, 112 S.Ct. 2072, 2077, 119 L.E.2d 265 (1992), "antitrust law limits the extent to which permissible inferences from ambiguous evidence may be drawn." Wigod v. Chicago Mercantile Exchange, 981 F.2d 1510, 1514 (7th Cir.1992). If the "record is clear that the antitrust claims cannot succeed ... judicial administration is served better by disposition prior to trial." Id. at 1514-15.

B. Antitrust Injury

Section 4 of the Clayton Act, 15 U.S.C. § 15(a), "defines the class of persons who may maintain private damage actions under the antitrust laws," see Local Beauty Supply, Inc. v. Lamaur, Inc., 787 F.2d 1197, 1200 (7th Cir.1986), and requires that a plaintiff show "antitrust injury" before a court can consider other substantive violations of the Sherman or Robinson-Patman Acts. See Brunswick Corp. v. Pueblo Bowl-O-Mat, Inc., 429 U.S. 477, 97 S.Ct. 690, 50 L.Ed.2d 701 (1977). In Greater Rockford Energy & Technology v. Shell Oil Co., 998 F.2d 391, 395 (7th Cir.1993), cert. denied, ___ U.S. ___, 114 S.Ct. 1054, 127 L.Ed.2d 375 (1994), the Seventh Circuit noted four elements a plaintiff must satisfy to bring an action for treble damages under Section 4 of the Clayton Act: "(1) a duty recognized by the antitrust laws; (2) a violation of the antitrust laws; (3) injury to an interest protected by the antitrust laws and attributable to the antitrust violation — that is antitrust injury; and (4) a direct link between the antitrust violation and the antitrust injury, that is to say, standing." (emphasis in original). The "antitrust injury doctrine" as elaborated in Atlantic Richfield Co. v. USA Petroleum Co., 495 U.S. 328, 110 S.Ct. 1884, 109 L.Ed.2d 333 (1990); Cargill Inc. v. Monfort of Colorado, Inc., 479 U.S. 104, 107 S.Ct. 484, 93 L.Ed.2d 427 (1986), Associated General Contractors, Inc. v. California State Council of Carpenters, 459 U.S. 519, 534, 103 S.Ct. 897, 906, 74 L.Ed.2d 723 (1983)⁴, and Brunswick, supra, "requires every plaintiff to show that its loss comes from acts that reduce output or raise prices to consumers." See Stamatakis Industries, Inc. v. King, 965 F.2d 469, 471 (7th Cir.1992) (quoting Chicago Professional Sports Limited Partnership v. National Basketball Ass'n, 961 F.2d 667, 670 (7th Cir.1992)); see also O.K. Sand and Gravel v. Martin Marietta Corp., 819 F.Supp. 771, 787 (S.D.Ind.1992).

In the context of the Robinson-Patman Act, BNA must show that the price discrimination it suffered may substantially lessen competition. See 15 U.S.C. § 13(a); Brook Group, Ltd. v. Brown & Williamson Tobacco Corp., ___ U.S. ___, 113 S.Ct. 2578, 125 L.Ed.2d 168 (1993) (Robinson-Patman Act "condemns price discrimination only to the extent that it threatens to injure competition.").⁵ Neither the Supreme Court nor the Seventh Circuit has addressed what constitutes a "competitive injury" under the Robinson-Patman Act; and the other circuits courts are divided on this issue. Some circuits have found that a plaintiff satisfies the antitrust injury requirement for a Robinson-Patman violation where the plaintiff showed an injury to competitors, not just consumers. See J.F. Feeser, Inc. v. Serv-A-Portion, Inc., 909 F.2d 1524, 15533-35, 1539-41 & n. 17 (3d Cir.1990) (secondary line Robinson-Patman plaintiff need show only injury to a competitor; proof of injury to competition unnecessary); Hasbrouck v. Texaco, Inc., 842 F.2d 1034, 1040 (9th Cir.1987) (plaintiff need only show a substantial price discrimination between themselves and their competitors over a period of time); P. Areeda & H. Hovenkamp, Antitrust Law ¶ 340.5 (Supp.1993). Others have required an injury to competition. See Boise Cascade Corp. v. FTC, 837 F.2d 1127, 1138-39, 1143-48 (D.C.Cir.1988); Richard Short Oil Co. v. Texaco, 799 F.2d 415 (8th Cir.1986) (lack of antitrust injury found where discriminating defendant was one of many sellers in the market).

In this case, BNA contends that its antitrust injury stems from Maytag's alleged fraudulent concealment of its Super Value Program. BNA claims that because it was not allowed to participate in the program, its sales and profits declined, prompting Maytag to cancel its RDA with BNA. BNA further maintains that Maytag's Super Value Program amounted to a conspiracy with Smith to utilize a predatory pricing scheme to eliminate BNA from the market as a purchaser of Maytag products. BNA concludes that the predatory pricing eliminated competition thereby causing antitrust injury. Finally, BNA points to the dramatic reduction of its sales of Maytag appliances starting from the date that Smith Furniture (BNA's competitor) enrolled in the Super Value Program.

The Court initially rejects BNA's contention that Maytag may have engaged in predatory pricing. In Cargill, supra, 479 U.S. at 117-18, 107 S.Ct. at 493, the Supreme Court defined "predatory pricing" as "pricing below an appropriate measure of cost for the purpose of eliminating competitors in the short run and reducing competition in the long run." The Court further noted that:

Predatory pricing is a practice that harms both competitors and competition. In contrast to price cutting aimed simply at increasing market share, predatory pricing has as its aim the elimination of competition. Predatory pricing is thus a practice `inimical to the purposes of the antitrust laws,' Brunswick, 429 U.S., at 488, 97 S.Ct., at 697, and one capable of inflicting antitrust injury. (emphasis in original).

Id. By contrast, nonpredatory pricing is "competitive pricing that cannot inflict antitrust injury upon a competitor." Indiana Grocery, Inc. v. Super Valu Stores, Inc., 864 F.2d 1409, 1420 (7th Cir.1989).

The Court finds that BNA has failed to raise any material facts which would support its allegation that Maytag...