Godix Equipment Export Corp. v. Caterpillar, Inc.

• Citation: 948 F.Supp. 1570
• Decision Date: 14 November 1996
• Docket Number: No. 93-1557-CIV.,No. 93-1624-CIV.,93-1624-CIV.,93-1557-CIV.
• Parties: GODIX EQUIPMENT EXPORT CORP., a Florida corporation, Plaintiff, v. CATERPILLAR, INC., a Delaware corporation, Defendant. Angel L. GONZALEZ d/b/a Universal Service Co., Plaintiff, v. CATERPILLAR, INC., a Delaware corporation, Defendant.
• Court: U.S. District Court — Southern District of Florida

948 F.Supp. 1570

GODIX EQUIPMENT EXPORT CORP., a Florida corporation, Plaintiff, v. CATERPILLAR, INC., a Delaware corporation, Defendant.

Angel L. GONZALEZ d/b/a Universal Service Co., Plaintiff, v. CATERPILLAR, INC., a Delaware corporation, Defendant.

No. 93-1624-CIV.

No. 93-1557-CIV.

United States District Court, S.D. Florida, Miami Division.

November 14, 1996.

COPYRIGHT MATERIAL OMITTED

COPYRIGHT MATERIAL OMITTED

Ronald Katz, Janet A. Hart, Coudert Brothers, San Francisco, CA, Mark E. Buechele, Miami Beach, FL, for Plaintiff.

Robert Abrams, Gregory L. Baker, Howrey & Simon, Washington, DC, Benedict P. Kuehne, Sale & Kuehne, P.A., Miami, FL, James B. Buda, Product Counsel, Caterpillar, Inc., Peoria, IL, for Defendant.

ORDER ON MOTIONS FOR JUDGMENT AS A MATTER OF LAW

NESBITT, District Judge.

I. Preliminary Statement

This cause came before the Court upon Defendant's Motions for Judgment as a Matter of Law Regarding Plaintiffs' Antitrust and State Law claims, filed October 21, 1996, Plaintiffs' Motions for Judgment as a Matter of Law on the Subjects of Geographic Market, Market Power, and Product Market, filed October 21, 1996, Plaintiffs' Motion to Dismiss Counts IX and X, filed October 21, 1996, and Plaintiffs' Oral Motion for Injunctive Relief, argued October 24, 1996. This written order is entered to supplement and amplify the Court's oral findings and rulings entered on the motions at the conclusion of the case on October 21, 1996.

In the consolidated actions for antitrust violations and various state claims, Plaintiffs Angel L. Gonzalez d/b/a Universal Service Company ("Gonzalez") and Godix Equipment Corporation ("Dixon"), resellers of Caterpillar replacement parts, seek damages and an injunction against Caterpillar for the implementation of Caterpillar's "Export Parts Policy" in general and as it applies to Plaintiffs' businesses. Plaintiffs claim that as a result of Defendant's fraud, tortious conduct, price-fixing, and so called "black list," Gonzalez lost customers and Dixon lost his entire business.

II. Facts

Defendant Caterpillar manufactures and sells construction machinery, agricultural machinery, engines, and parts for those machines to customers worldwide. Caterpillar is one of the world's largest companies in this field, with sales exceeding ten billion dollars annually. A world-wide independent dealer network has developed to sell Caterpillar machines and replacement parts as well as provide local service and support to foreign Caterpillar customers. There are over 500,000 replacement parts for Caterpillar products. The replacement parts for Caterpillar machines are either genuine Caterpillar parts, produced and distributed by Caterpillar, or other "will-fit" parts. The "will-fit" parts are produced by other companies either at the direction of Caterpillar or independently and will operate interchangeably in Caterpillar machines.

Plaintiffs' companies function as "parallel" traders or resellers to the Caterpillar dealer network in the replacement parts market. They buy genuine Caterpillar parts or "will-fit" parts either from Caterpillar or independent suppliers and then re-market them to domestic exporters or directly to foreign customers ("end users"). Plaintiffs claimed that their success in the market was due to their ability to provide more efficient service to end users, through their well developed distribution channels, and their generally lower prices. Part of the reason why Plaintiffs were able to provide and maintain a lower price was the streamlined nature of their companies. Unlike authorized Caterpillar dealers, Plaintiffs had no service departments or product support services.

In 1982, Caterpillar instituted the "Export Parts Policy" to eliminate what it recognized as an ongoing problem of free-riding and dealer misconduct among resellers and other dealers of genuine Caterpillar Parts. To allow Caterpillar to maintain some destination control, the "Exports Parts Policy" required Caterpillar parts dealers to identify the end users for each part sold. Additionally, the "Export Parts Policy" charged a higher wholesale price to provide a pool of funds to pay credits to local dealers who provided services. Caterpillar claimed that without the "Export Parts Policy," its dealers were, in effect, subsidizing resellers such as Plaintiffs because Caterpillar dealers maintained service departments and other product support services while the resellers were free to only sell replacement parts. In 1990, as a further step to strengthen its support system and eliminate free riding, Caterpillar created the Caterpillar Export Services ("CES") as an umbrella agency to sell all genuine Caterpillar parts to authorized dealers around the world.

Gonzalez is a reseller of Caterpillar replacement parts, selling genuine Caterpillar parts as well as other "will-fit" non-genuine Caterpillar parts to end users mainly in Latin America. Gonzalez claims that as a result of the "Export Parts Policy," he can no longer purchase from any Caterpillar dealer genuine Caterpillar parts for export, negotiate a "discount price" with Caterpillar dealers, or ship genuine Caterpillar replacement parts directly to an end user in another country. Gonzalez also claims that at the inception of the CES, he was induced to turn over his confidential customer lists to CES, believing that they would remain confidential.

After the implementation of the "Export Parts Policy," purchase of genuine Caterpillar replacement parts for export is to be made through either CES by an authorized agent ("Caterpillar dealer") or through an authorized purchasing agent who was to furnish CES with an overseas end user code to insure authorized distribution. The wholesale price and terms from CES under the "Export Parts Policy," the "Export Dealers Net Price," is fixed at 90 percent of the suggested retail price which is an increase from 75 percent of the suggested retail price from the pre-policy period. To reach the 90 percent charge under the current Export Parts Policy, a five percent charge for CES overhead and a ten percent charge to finance service departments and other product enhancing efforts at overseas Caterpillar dealers is added to the fixed 75 percent rate. The Caterpillar dealers, however, may negotiate the final retail sale price and terms with the individual overseas end users.

Gonzalez claims that because genuine Caterpillar replacement parts for export can only be purchased through CES, he is no longer able to obtain the discounts previously negotiated with individual Caterpillar dealers under the pre-policy prices. Additionally, Gonzalez asserts that he can no longer obtain parts at a discount because of the increase in wholesale prices and because of an agreement between Caterpillar and Caterpillar dealers to adhere to the suggested retail price and eliminate any potential discounts from that price. The effect of the loss of discounts would be to price Gonzalez out of the genuine Caterpillar parts reseller's market.

Gonzalez also contends that as an unauthorized reseller doing business in overseas markets, he was placed on the Caterpillar "Reseller List," referred to by Plaintiffs as the "black list," and denied the opportunity to purchase any genuine Caterpillar parts from CES or any other Caterpillar dealer. Gonzalez claims that Caterpillar used reinvoicing, audits, sting operations, and other enforcement techniques to fine and punish any Caterpillar dealers who sold genuine Caterpillar parts to him for overseas resale. As a result of not being able to purchase and sell genuine Caterpillar parts directly, Gonzalez maintains that he lost end user customers who regularly purchased genuine Caterpillar parts from him, and as a consequence suffered a substantial loss in profits from those lost sales.

Dixon was also a reseller of Caterpillar replacement parts, but he sold only genuine Caterpillar replacement parts to overseas end users. Dixon's claims are substantially similar to Gonzalez's in that he can no longer purchase genuine Caterpillar parts for export from any Caterpillar dealer, negotiate a "discount price" with Caterpillar dealers, or ship genuine Caterpillar replacement parts directly to an end user. Dixon also alleges that Caterpillar similarly induced him to turn over his customer lists on the condition that they would be kept confidential.

Dixon claims that as a result of the "Export Parts Policy" he lost his business. Specifically, Dixon contends that he was denied his only access to genuine Caterpillar parts and he was not in the business of selling other will-fit or generic Caterpillar parts.

III. Claims Alleged

On April 20, 1995 each Plaintiff filed an eleven count Amended Complaint alleging parallel antitrust and state claims against Caterpillar in relation to the implementation of Caterpillar's "Export Parts Policy." Of the remaining counts¹: Count I alleges that Caterpillar committed fraud in inducing Plaintiffs to disclose confidential customer lists resulting in a loss of business; Count II alleges that Caterpillar tortiously interfered with Plaintiffs' business relationships with their clients; Counts III and IV allege violations of the Sherman Antitrust Act by Caterpillar, claiming that Caterpillar conspired with its dealers to fix retail prices for genuine Caterpillar parts in violation of 15 U.S.C. § 1, exercised its monopoly power to exclude Plaintiffs from the replacement parts market by the implementation of a "black list", and attempted to monopolize the entire market for Caterpillar replacement parts in violation of 15 U.S.C. § 2; and Counts V and XI reallege the basis for the antitrust violations and request that the Court grant injunctive relief.

IV. Applicable Law

A party seeking Judgment as a Matter of law at the end of the trial must demonstrate that there "is no legally sufficient evidentiary basis for a reasonable jury to find for that party on that issue."...