Emergency One, Inc. v. Waterous Co., Inc.

• Decision Date: 20 October 1998
• Docket Number: No. 97-C-692.,97-C-692.
• Citation: 23 F.Supp.2d 959
• Parties: EMERGENCY ONE, INC., Plaintiff, v. WATEROUS CO., INC., Pierce Manufacturing, Inc., and Hale Products, Inc., Defendants.
• Court: U.S. District Court — Eastern District of Wisconsin

23 F.Supp.2d 959

EMERGENCY ONE, INC., Plaintiff, v. WATEROUS CO., INC., Pierce Manufacturing, Inc., and Hale Products, Inc., Defendants.

No. 97-C-692.

United States District Court, E.D. Wisconsin.

October 20, 1998.

W. Stuart Parsons, Quarles & Brady, Milwaukee, WI, Anthony Feeherry, Chris Holding, Goodwin, Procter & Hoar, Boston, MA, Keith D. Shugarman, Goodwin, Procter & Hoar, Washington, DC, Kim Wehrenberg, Federal Signal Corp., Oak Brook, IL, for Plaintiff.

Scott Hansen, Reinhart, Boerner, Van Dueren, Norris & Rieselbach, Milwaukee, WI, Gary M. London, Burr & Forman, Birmingham, AL, for Defendant Waterous.

Attorney James McKeown, Foley & Lardner, Milwaukee, WI, for Defendant Pierce Manufacturing, Inc.

James Greer, Whyte, Hirschboeck & Dudek, Milwaukee, WI, Paul Cuomo, Collier, Shannon, Rill & Scott, Washington DC, for Defendant Hale Products Inc.

DECISION AND ORDER

ADELMAN, District Judge.

This decision considers the scope of the Wisconsin antitrust statutes with respect to interstate trade and, in particular, the relevant effect of the 1980 amendments to Wis. Stat. Chapter 133, the state law regulating trusts and monopolies. Plaintiff Emergency One, Inc. ("E-One"), a Florida-based manufacturer of fire trucks, brings this action against defendants Waterous Company, Inc. ("Waterous"), Pierce Manufacturing, Inc. ("Pierce") and Hale Products, Inc. ("Hale"), on twenty-two counts alleging violations of state and federal antitrust law, state unfair trade practices and other economic torts. Defendants have moved to dismiss all state claims brought under Wis. Stat. §§ 133.03 and 100.20 (counts X-XVIII of the amended complaint), arguing principally that the complaint alleges predominantly interstate transactions not covered by Chapter 133. For the reasons discussed below, defendants' motions to dismiss these claims will be granted.

I. FACTUAL BACKGROUND

E-One is an original equipment manufacturer ("OEM") of fire trucks. E-One's principal OEM competitor is defendant Pierce, incorporated and located in Wisconsin. According to the amended complaint, Pierce was founded in about 1913 and until recently was the leading OEM in the United States. E-One entered the fire truck business in 1975 and has grown substantially by pioneering innovative features such as aluminum body trucks.

Defendant Waterous is a Minnesota corporation that manufactures, among other things, items known as mid-ship mounted fire pumps. Waterous' chief fire pump competitor is defendant Hale, a Pennsylvania corporation. Together, Waterous and Hale allegedly account for more than ninety percent of all the mid-ship mounted fire pumps produced in the United States. These fire pumps are one of the key components of the fire trucks manufactured by OEMs like E-One and Pierce.

Both E-One and Pierce sell fire trucks to municipalities and other purchasers across the United States, including in Wisconsin. The amended complaint estimates that 3500 to 4000 fire trucks are purchased by fire departments in the United States each year. Typically, fire trucks are purchased through a public bidding process in which the purchasing entity details its desired fire truck specifications. OEMs often maintain a network of dealers who sell fully assembled fire trucks; certain OEMs also make direct sales to purchasing fire departments. E-One claims that it has maintained dealers throughout the country for years, including the following in Wisconsin: Great Lakes Fire Equipment, in Waukesha (since 1996); Five Alarm, in Fort Atkinson (1995-96); and Fireline, in Union Grove (1992-94). At times when it has not had dealers located in Wisconsin, E-One claims to have made direct sales to fire truck purchasers in the state.

Plaintiff's amended complaint alleges two conspiracies — one horizontal and one vertical — that have allegedly choked the U.S. market for fire pumps for many years. First, E-One alleges a horizontal customer allocation conspiracy between Waterous and Hale. Specifically, plaintiff alleges that Waterous and Hale divided the nationwide OEM customer base between themselves, restricting each fire truck manufacturer to only one pump supplier. Waterous supplied mid-ship mounted fire pumps to Pierce; Hale supplied the same to E-One and other OEMs. For years, Waterous allegedly refused to sell these fire pumps to E-One on any basis whatsoever, even at prices above the discounted prices paid by Pierce. Under this "duopolistic" arrangement, plaintiff and other OEMs were forced to pay artificially inflated pump prices. Additionally, because the ultimate purchasers of fire trucks — municipalities and fire departments — often need trucks made with fire pumps from a specific manufacturer in order to maintain fleet commonality for operational and maintenance reasons, the fact that E-One could not produce trucks with Waterous pumps limited its ability to bid on many fire truck contracts.

Plaintiff also alleges a vertical exclusive dealing conspiracy between Waterous and Pierce, in which Pierce, the dominant seller of Waterous pumps, restricted Waterous' dealings with actual and potential pump customers. For example, plaintiff alleges that Pierce complained to Waterous when E-One was able to install approximately five Waterous mid-ship mounted fire pumps due to E-One's acquisition of a Canadian OEM that had been a Waterous customer. Plaintiff alleges that Pierce demanded that Waterous prevent E-One from obtaining further Waterous pumps in this indirect way. Waterous subsequently terminated the Canadian OEM as a customer and made it agree not to transfer any more Waterous pumps to E-One, as a condition of reinstatement.

The Federal Trade Commission ("FTC") pursued antitrust proceedings against Waterous and Hale in the early 1990s. The FTC proceedings concluded in 1996 consent orders enjoining both Waterous and Hale "from entering into, continuing, or enforcing any agreement or understanding requiring an OEM to purchase fire pumps on an exclusive basis for a period of twenty years." (Am. Compl. at 92.)

II. ANALYSIS

Waterous, Hale and Pierce all filed motions to dismiss certain state claims under Fed.R.Civ.P. 12(b)(6). In reviewing a complaint pursuant to any motion to dismiss, I assume all well-pleaded facts to be true, and draw all reasonable inferences from those facts in favor of the plaintiff. Gutierrez v. Peters, 111 F.3d 1364, 1368-69 (7th Cir.1997). This court will dismiss an action or a claim pursuant to a Rule 12(b)(6) motion for failure to state a claim upon which relief can be granted if, under this generous standard, the plaintiff can prove no set of facts that would entitle it to relief. See Fed.R.Civ.P. 12(b)(6); General Elec. Capital Corp. v. Lease Resolution Corp., 128 F.3d 1074, 1080 (7th Cir. 1997); see also Conley v. Gibson, 355 U.S. 41, 45-46, 78 S.Ct. 99, 2 L.Ed.2d 80 (1957).

A. Claims Based on Wis. Stat. § 133.03

Defendants argue that plaintiff's factual allegations, even if true, fail to state a claim upon which relief can be granted under Wis. Stat. §§ 133.01-.18., Wisconsin's chapter regulating trusts and monopolies. Specifically, defendants argue that plaintiff's allegations refer to entirely interstate transactions, rather than wholly or even predominantly intra state transactions. According to defendants, Wisconsin courts have long held that a conspiracy relating to largely interstate rather than intrastate commerce is flatly beyond the reach of state antitrust statutes and subject only to federal law. After attempting to play up the scant Wisconsin connections in its complaint, plaintiff responds that the 1980 amendments to Wis. Stat. Chapter 133 — which extensively revised Wisconsin law on trusts and monopolies — were consciously intended to expand the scope of the antitrust statutes to reach even predominantly interstate transactions. Wisconsin courts have not directly considered how the 1980 amendments may have altered the coverage of Chapter 133 with respect to interstate commerce. In the absence of a decision by the highest state court, I decide this matter as I believe the Wisconsin Supreme Court would if squarely presented with the issue. L.S. Heath & Son, Inc. v. AT & T Info. Systems, 9 F.3d 561, 574 (7th Cir.1993).

1. Effect of the 1980 Amendments

Since the early part of this century, Wisconsin courts have repeatedly, if summarily, noted that the state's antitrust laws were intended to apply to intrastate commerce, while the federal Sherman Antitrust Act, 15 U.S.C. §§ 1 and 2, applied to interstate transactions. See, e.g., Pulp Wood Co. v. Green Bay Paper & Fiber Co., 157 Wis. 604, 625, 147 N.W. 1058 (1914); State v. Lewis & Leidersdorf Co., 201 Wis. 543, 549, 230 N.W. 692 (1930); Reese v. Associated Hosp. Serv., Inc., 45 Wis.2d 526, 532, 173 N.W.2d 661 (1970); John Mohr & Sons, Inc. v. Jahnke, 55 Wis.2d 402, 410, 198 N.W.2d 363 (1972); State v. Waste Management of Wis., Inc., 81 Wis.2d 555, 574, 261 N.W.2d 147 (1978). The Wisconsin Supreme Court reiterated this idea in typical language in June 1980:

We have repeatedly stated that § 133.01, Stats., was intended as a reenactment of the first two sections of the federal Sherman Antitrust Act of 1890, 15 U.S.C. §§ 1 and 2, with application to intrastate as distinguished from interstate transactions and that the question of what acts constitute a combination or conspiracy in restraint of trade is controlled by federal court decisions under the Sherman Act.

Grams v. Boss, 97 Wis.2d 332, 346, 294 N.W.2d 473 (1980).¹ Most recently, this language was recycled in American Med. Transp., of Wis. v. Curtis-Universal, Inc., 148 Wis.2d 294, 299, 435 N.W.2d 286 (Ct.App. 1988).

For present purposes, what is significant about this oft-cited string of precedent is that, for the most part, these decisions reflexively restate the intrastate/interstate distinction as a mere preface to the courts' reliance on federal cases in interpreting Wisconsin antitrust law. With the possible exception of...