O'Dell v. General Motors Corp.

• Decision Date: 06 October 2000
• Docket Number: No. 9:98-CV-123.,9:98-CV-123.
• Parties: David O'DELL, d/b/a A & B Speedometer Radio Inc., et al. v. GENERAL MOTORS CORP., and Delco Electronics Corp.
• Court: U.S. District Court — Eastern District of Texas

122 F.Supp.2d 721

David O'DELL, d/b/a A & B Speedometer Radio Inc., et al. v. GENERAL MOTORS CORP., and Delco Electronics Corp.

No. 9:98-CV-123.

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

October 6, 2000.

COPYRIGHT MATERIAL OMITTED

George M. Fleming, Rand Patrick Nolen, James L. Doyle, Gregory Sean Jez, Fleming & Associates, Houston, TX, for Plaintiff.

Ernest Ryan Higginbotham, Kay Lynn Brumbaugh, Strasburger & Price, Dallas, TX, William B. Slowey, GMC—Legal Staff, Detroit MI, for Defendant.

MEMORANDUM OPINION

COBB, District Judge.

This is a dealer termination case filed by 18 unaffiliated radio repair shops ("Plaintiffs") against Defendants General Motors ("GM") and Delco Electronics Corporation ("Delco"). Plaintiffs are former authorized Delco radio repair shops whose contracts were terminated or not renewed by Defendants. Plaintiffs' businesses have suffered as a result of the loss of the contracts and, therefore, they seek assistance in this Court. Plaintiffs allege that their termination violates several federal antitrust laws. They also contend that Defendants' conduct violates Texas contract law and California and Indiana consumer protection law. Defendants move for summary judgment on the antitrust claims and the Texas contract law claim. Plaintiffs move for summary judgment on their state consumer protection law claims. After reviewing the evidence¹ on Plaintiffs' antitrust claims, the Court grants Defendants' motion on the (1) conspiracy claim because Plaintiffs have presented no evidence of any conspiracy between Defendants and the remaining authorized service centers or evidence of the anticompetitive effects of Defendants' conduct; (2) price discrimination claim because Plaintiffs have presented no evidence that the indirect purchaser doctrine is applicable to their case and, even if it is applicable, they have not offered sufficient evidence that Defendants discriminated in terms of price; and (3) attempted monopolization claim because Plaintiffs have offered no evidence of Defendants' market power. The Court denies Defendants' motion on the Texas contract claim and Plaintiffs' motion on the California and Indiana state law claims. Moreover, because jurisdiction was premised on the now dismissed federal antitrust claims, the Court dismisses Plaintiffs' state law claims without prejudice, allowing them to seek redress in state court. The Court presents the facts in the light most favorable to the Plaintiffs.

I. Facts

Defendant GM is the largest automobile manufacturer in the world. It manufactures and sells radios and other products primarily for use in GM automobiles through its Service Parts Operations ("GMSPO") and ACDelco, a subsidiary of GMSPO. GM also manufactures and sells radios and other products primarily for use in GM automobiles through its Delco subsidiary. For all relevant times in this lawsuit, Delco was a wholly owned subsidiary of GM.

Plaintiffs are the owners of businesses that perform radio and electrical instrument repairs. When a GM car is taken to a dealer to work on its Delco radio (or other electrical device), the dealership contracts with a "Delco shop" to perform the work. Plaintiffs were owners of such shops and performed warranty and nonwarranty repairs on Delco products, including selling Delco parts and radios, speedometers, odometers, and tachometers.

In order to become an authorized Delco shop, Defendants required that the shop purchase certain equipment, some of which could only be used to service Defendants' products. Delco shops were also required to stock certain inventory, attend training classes, and perform a minimum amount of Delco business each month. Plaintiffs and Defendants had entered into service center agreements or warehouse distribution agreements with these Delco shops. The service center agreements permitted the repair shops to perform warranty repair service for which GM paid the service center. These agreements also permitted either party to terminate the agreement, with or without cause, upon 30 days notice. The warehouse distributor agreements permitted the repair shops to obtain parts from GM and its subsidiaries, including Delco, and also permitted either party to terminate the agreement.

Defendants terminated or did not renew many of these agreements with Plaintiffs. Defendants maintain that changes in the manufacturing technology of Delco products over the past several years have required changes in how these products are serviced. They claim that they decided to terminate the agreements with Plaintiffs because the agreements no longer made "business sense." Because of rising costs in inventory and repair equipment, increased consumer demands, and extended warranty coverage, "Defendants determined that they must evolve from a system utilizing numerous, and often small, repair centers to a few specialized facilities with complete remanufacturing facilities." (Def.s' Mot. Summ. J. Br. Supp. at 3.) Defendants decided to refer all repair work to authorized service centers only. Plaintiffs agree that the trend has been toward replacement of the entire radio rather than repair of component parts. This trend is evidenced further by the fact that Ford and Chrysler have also consolidated their repair networks and terminated small repair shops. (Def.s' Mot. Summ. J. Br. Supp. at 4.) As a result of Defendants' decision to terminate Plaintiffs' contracts, there are 19 authorized service centers (there were 28 when Plaintiffs originally filed their suit) nationwide that can perform warranty repairs on Delco electronic parts for vehicle year models 1995 and newer.

Plaintiffs contend that Defendants terminated Plaintiffs' warranty repair work on Delco radios, but told them they could still buy parts and perform non-warranty repairs. Plaintiffs' claim Delco then refused to sell parts directly to Plaintiffs, forcing them to buy parts at higher prices from the 19 remaining shops still authorized to perform warranty repairs. Finally, according to Plaintiffs, Defendants completely prohibited Plaintiffs from buying any replacement parts or obtaining service literature necessary to perform non-warranty work on Delco electronic parts.

Plaintiffs filed this suit on May 18, 1998 alleging several causes of action against Defendants. First, according to Plaintiffs First Amended Complaint, Defendants violated the Clayton Act by "engaging in exclusive dealing contracts with the twenty-eight authorized service centers by cutting off the Plaintiffs in monopolistic fashion." In their response to Defendants' Motion for Summary Judgment, however, this claim was transfigured into a claim that "Defendants have attempted to monopolize the market for service work on Delco products, in violation of § 2 of the Sherman Act ...." (Pl.s' Opp'n Def.s' Mot. Summ. J. at 2.) Plaintiffs also claim Defendants violated the Robinson-Patman Act by "engaging in commerce to directly or indirectly discriminate in the price charged for Delco electronic parts." Plaintiffs further assert that Defendants violated Section 1 of the Sherman Act by "engaging in civil conspiracy with each other and the twenty-eight authorized service centers to restrict the sell [sic] of Delco electronic parts and sharply limit the number of shops which could repair and manufacture Delco products." Finally, Plaintiffs allege that Defendants breached "impliedly created" franchise agreements, and violated consumer protection laws in Indiana and California. After over 18 months of discovery, Plaintiffs and Defendants moved for summary judgment.

II. Analysis

Defendants move for summary judgment on Plaintiffs' antitrust and state law contract claims. Plaintiffs move for summary judgment on their state law consumer protection claims. The Court will consider the antitrust law claims first, because dismissal of those claims may obviate the need to consider the state law claims. Defendants first argue that certain plaintiffs' claims are barred by the statute of limitations. On the conspiracy in restraint of trade claim, Defendants assert that Plaintiffs have failed to produce any evidence of an agreement and have failed to identify with specificity the service centers with which Defendants are alleged to have conspired. On the price discrimination claim, Defendants contend that Plaintiffs have produced no evidence to support the conclusion that Defendants charged higher prices to Plaintiffs than to other purchasers. Defendants counter Plaintiffs' attempted monopolization claim by asserting that Plaintiffs have failed to identify evidence on the relevant market, market power, intent to monopolize, or dangerous probability of achieving monopoly power. Finally, Defendants contend that Plaintiffs have produced no evidence to support their claim that they have suffered antitrust injury. The Court begins by discussing the standards by which Plaintiffs' and Defendants' motions will be evaluated.

A. Summary Judgment Standard

Summary judgment is appropriate 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.P. 56(c); Celotex Corp. v. Catrett, 477 U.S. 317, 322, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). The moving party must identify evidence that establishes the absence of any genuine issue of material fact, id. at 323, 106 S.Ct. 2548, and the court reviewing a grant of summary judgment must evaluate the facts in the light most favorable to the nonmovant. See Todd v. AIG Life Ins. Co., 47 F.3d 1448, 1451 (5th Cir.1995). Once the moving party has properly supported its motion, the burden shifts to the party opposing summary judgment to demonstrate genuine issues of material fact necessitating a trial, using the evidentiary sources set forth in Rule 56(c). See Celotex, 477 U.S. at 324, 106...