Caribe BMW, Inc. v. Bayerische Motoren Werke Aktiengesellschaft

• Decision Date: 03 November 1993
• Docket Number: No. 93-1653,93-1653
• Citation: 19 F.3d 745
• Parties: , 1994-1 Trade Cases P 70,548 CARIBE BMW, INC., Plaintiff, Appellant, v. BAYERISCHE MOTOREN WERKE AKTIENGESELLSCHAFT, et al., Defendants, Appellees. . Heard
• Court: U.S. Court of Appeals — First Circuit

Page 745

19 F.3d 745

62 USLW 2597, 1994-1 Trade Cases P 70,548

CARIBE BMW, INC., Plaintiff, Appellant, v. BAYERISCHE MOTOREN WERKE AKTIENGESELLSCHAFT, et al.,

Defendants, Appellees.

No. 93-1653.

United States Court of Appeals, First Circuit.

Heard Nov. 3, 1993.

Decided March 25, 1994.

Anne M. Rodgers with whom William R. Pakalka, Fulbright & Jaworski, L.L.P., Houston, TX, Enrique J. Mendoza Mendez, Law Offices of Enrique J. Mendoza Mendez, Santurce, PR, Randall A. Hopkins, Randall A. Hopkins, P.C., Dahr Jamail, Jamail & Kolius, Thomas R. McDade, and McDade & Fogler, L.L.P., Houston, TX, were on brief and reply brief, for plaintiff, appellant.

Irving Scher, New York City, and Manuel A. Guzman, Hato Rey, PR, with whom Bruce A. Colbath, Weil, Gotshal & Manges, New York City, and McConnell Valdes, Hato Rey, PR, were on brief, for defendants, appellees.

Before BREYER, Chief Judge, COFFIN, Senior Circuit Judge, and BOUDIN, Circuit Judge.

BREYER, Chief Judge.

This appeal raises two issues of antitrust law. First, do a firm's wholly owned subsidiary and the firm itself amount to a "single seller" under the Robinson-Patman Act? 15 U.S.C. Sec. 13. Second, can a retailer's lost profit, brought about by a maximum resale price fixing agreement between that retailer and its supplier, amount to an "antitrust injury," thereby giving that retailer "standing" to obtain treble damages? Atlantic Richfield Co. v. USA Petroleum Co. ("ARCO"), 495 U.S. 328, 110 S.Ct. 1884, 109 L.Ed.2d 333 (1990); Albrecht v. Herald Co., 390 U.S. 145, 88 S.Ct. 869, 19 L.Ed.2d 998 (1968). We answer both these questions in the affirmative. Because the district court's dismissal of the plaintiff's complaint rested upon negative answers to the same questions, we set its dismissal aside.

I Background

From 1981 through 1990, Caribe BMW, Inc. ("Caribe"), through contracts with the German BMW manufacturer, Bayerische Motoren Werke Aktiengesellschaft ("BMW AG"), bought BMW automobiles from BMW AG in Germany, imported them into Puerto Rico, and sold them at retail. In February 1991, Caribe (the appellant here) brought this lawsuit against (the appellees) BMW AG and BMW's wholly owned North American subsidiary, BMW of North America, Inc. ("BMW NA"). Caribe's complaint (actually, its second amended complaint), with commendable simplicity, listed four counts.

Count I charged a violation of the Robinson-Patman Act. 15 U.S.C. Sec. 13. It said that BMW AG sold cars to BMW NA, which resold those cars to other retailers who competed with Caribe, at prices lower than, or on terms more favorable than, those at which BMW AG sold similar cars to Caribe. Count II charged a violation of Sec. 1 of the Sherman Act. 15 U.S.C. Sec. 1. It said that BMW AG had set maximum resale prices for the cars that it sold to Caribe by "threaten[ing] to terminate Caribe's contracts" unless Caribe would agree, in effect, to maintain low resale prices. Count III charged "breach of contract." It listed various ways in which BMW AG had allegedly broken its word. Count IV charged that, in terminating its contract with Caribe, BMW AG had violated Puerto Rico's Dealers' Contracts Act, more familiarly known as Act 75. P.R.Laws Ann. tit. 10, Sec. 278 et seq.

The district court dismissed the complaint for two related reasons. First, it found that the complaint's two antitrust counts "fail[ed] to state a claim upon which relief can be granted." Fed.R.Civ.P. 12(b)(6). Second, it noted that a forum selection clause in the contracts between Caribe and BMW AG provided for "exclusive jurisdiction" in "Germany" to resolve "disputes" about the "termination of" or "rights and duties arising out of" the agreement. It found this clause applicable to the remaining (non-antitrust) claims, and it dismissed those claims "for improper venue" or, in the alternative, "on grounds of forum non conveniens." Caribe BMW, Inc. v. Bayerische Motoren Werke Aktiengesellschaft, 821 F.Supp. 802 (D.P.R.1993). Caribe appeals.

When reviewing the dismissal of the antitrust claims we take the facts basically as stated in the complaint and make reasonable inferences that will help the plaintiff. Garita Hotel Ltd. Partnership v. Ponce Fed. Bank, F.S.B., 958 F.2d 15, 17 (1st Cir.1992). After examining those facts, in light of the relevant law, we conclude that the district court should not have dismissed the antitrust claims. And, that conclusion requires the district court to reexamine dismissal of the other claims as well.

II

The Robinson-Patman Act Claim

The Robinson-Patman Act forbids "any person "

to discriminate in price between different purchasers of commodities of like grade and quality ... where the effect of such discrimination may be ... to injure ... competition with any person who ... grants ... the ... discrimination, or with [that granting person's] customers....

15 U.S.C. Sec. 13(a). Caribe's complaint alleges most of the essentials of a violation. It says that a "person " has "discriminate[d] in price between different purchasers" (namely, Caribe and other retailers in competition with Caribe) of cars, with the effect that "competition with" that person's "customer" (namely, Caribe) is "injure[d]." See FTC v. Morton Salt Co., 334 U.S. 37, 45, 68 S.Ct. 822, 827-28, 92 L.Ed. 1196 (1948). But, it embodies an ambiguity in respect to the "person " who did the discriminating. It says that BMW AG sold cars directly to Caribe, which resold them at retail. It then says that BMW NA sold cars to other retailers, who compete with Caribe, at lower prices than BMW AG sold its cars to Caribe. At this point, there appear to be two "persons" selling BMWs to retailers, namely, BMW AG (selling them to Caribe) and BMW NA (selling them to Caribe's competitors). The complaint adds, however, that BMW NA is the wholly owned subsidiary of BMW AG. Thus, we must face the legal question of whether or not this last mentioned fact is sufficient to make of the two separately incorporated companies a single "person" for Robinson-Patman Act purposes. If so, the complaint properly alleges that a single "person" has sold similar goods at two different prices (allegedly with the required statutory effect). If not, there may be no "person" who has "discriminate[d]." See id. ("discrimination" requires at least two sales by a single person at different prices to different customers in competition with each other); see also Phillip Areeda & Louis Kaplow, Antitrust Analysis p 601(c) (4th ed. 1988); 3 Earl W. Kintner & Joseph P. Bauer, Federal Antitrust Law Sec. 21.11, at 192-93 (1983).

So far, when courts have faced this question--whether or not a firm and its subsidiary amount to a single "person" (or a "single seller")--they have answered it by examining the extent of common ownership and the degree of control over pricing and distribution policies that the one exercises over the other. See Acme Refrigeration of Baton Rouge, Inc. v. Whirlpool Corp., 785 F.2d 1240, 1243 (5th Cir.) (100% ownership, without control, not enough to create a "single seller"), cert. denied, 479 U.S. 848, 107 S.Ct. 171, 93 L.Ed.2d 108 (1986); Island Tobacco Co. v. R.J. Reynolds Indus., Inc., 513 F.Supp. 726, 734 (D.Haw.1981) (same); Baim & Blank, Inc., v. Philco Corp., 148 F.Supp. 541, 543-44 (E.D.N.Y.1957) (same); Massachusetts Brewers Ass'n v. P. Ballantine & Sons Co., 129 F.Supp. 736, 739 (D.Mass.1955) (same); see also Kintner & Bauer, supra, Sec. 21.16 at 212. In this case, the extent of ownership is 100%; Caribe's complaint alleges nothing about actual control. Thus, we must ask whether 100% ownership, by itself, amounts to a sufficient allegation that the "firm plus subsidiary" are a single Robinson-Patman Act "person." We conclude, for reasons that we shall now explain, that it does.

For purposes of clarity, we shall refer in our explanation to hypothetical entities whom we shall call 1) the Manufacturer (M), 2) its wholly owned Distributor (D), 3) the Retailer (R1) who buys from D, and 4) the Direct Buying Retailer (DBR), who buys directly from M and who resells in competition with R1. The distribution arrangement looks like the following:

NOTE: OPINION CONTAINS TABLE OR OTHER DATA THAT IS NOT VIEWABLE

In our case, BMW AG holds the position of M; BMW NA, the position of D; Caribe, the position of DBR; and Caribe's unspecified retail competitors, the position of R1. The legal question, put in terms of the diagram, is whether or not M's 100% ownership of D makes M and D, together, a "single seller," say "MD." If so, a single "person" (allegedly) "discriminates" in price.

We now return to the reasons for our affirmative answer, which are three. First, in 1984, after many of the above-cited "single seller" cases were decided, the Supreme Court decided Copperweld Corp. v. Independence Tube Corp., 467 U.S. 752, 104 S.Ct. 2731, 81 L.Ed.2d 628 (1984). The Court there considered the scope of Sherman Act Sec. 1's word "conspiracy." It held that the word did not cover an agreement between a wholly owned subsidiary and its parent, because a wholly owned subsidiary could not "conspire" with the parent. That, the Court said, is because they have

a complete unity of interest. Their objectives are common, not disparate; their general corporate actions are guided or determined not by two separate corporate consciousnesses, but one.... [And] [t]hey share a common purpose whether or not the parent keeps a tight rein over the subsidiary....

Id. at 771, 104 S.Ct. at 2742. The Court added that a "corporation has complete power to maintain" a portion of the enterprise either in the form of an unincorporated division, or in the form of a separately incorporated subsidiary. But, the

economic, legal, or other considerations that lead corporate management to choose one structure over the other are not relevant to whether the enterprise's conduct seriously threatens competition.

Id. at 772, 104 S.Ct. at 2742. For these reasons, the Court held,

the coordinated activity of a...