Gregory Marketing Corp. v. Wakefern Food Corp.

• Decision Date: 16 December 1985
• Citation: 207 N.J.Super. 607,504 A.2d 828
• Parties: , 1986-1 Trade Cases P 66,972 GREGORY MARKETING CORPORATION and Daniel Scher, Plaintiffs v. WAKEFERN FOOD CORPORATION and Apple Marketing Co-Op, Inc., Defendants.
• Court: New Jersey Superior Court

Page 607

207 N.J.Super. 607

504 A.2d 828, 1986-1 Trade Cases P 66,972

GREGORY MARKETING CORPORATION and Daniel Scher, Plaintiffs v. WAKEFERN FOOD CORPORATION and Apple Marketing Co-Op, Inc., Defendants.

Superior Court of New Jersey, Law Division Essex County.

Decided Dec. 16, 1985.

Bruce H. Nagel, Westfield, (Meth, Nagel, Rice, Woehling & Bausch, Westfield, attorneys; Bruce H. Nagel, Westfield, and Randee M. Matloff, Newark, on brief), for plaintiffs.

Roger B. Kaplan, Woodbridge, (Wilentz, Goldman & Spitzer, Woodbridge, attys.; Weil, Gotshal & Manges, New York City of counsel), for defendant Wakefern Food Corp.

Louis A. Ruprecht, Millburn, (McDermott, McGee & Ruprecht, Millburn, attys.), for defendant Apple Marketing Co-op, Inc.

VILLANUEVA, J.S.C.

Defendants move for summary judgment to dismiss one count of plaintiffs' complaint.

The issues are whether plaintiffs' complaint alleging price discrimination sets forth a cause of action under the New Jersey Antitrust Act, N.J.S.A. 56:9-3, and whether plaintiffs are barred from maintaining this action under the doctrines of res judicata and collateral estoppel, because an identical claim made under federal antitrust statutes, containing the same statutory provisions, was dismissed in the United States District Court for lack of antitrust standing.

The court holds plaintiffs' claims under the act are barred by the dismissal of their prior federal action under the doctrines of res judicata and collateral estoppel. In addition, plaintiffs' complaint fails to state a cause of action under the New Jersey Antitrust Act.

The first count of plaintiffs' complaint ¹ alleges a cause of action against Wakefern Food Corporation ("Wakefern") for illegal price discrimination in violation of § 3 of the New Jersey Antitrust Act (the "New Jersey act"), N.J.S.A. 56:9-3. Plaintiffs allege that Wakefern received preferential prices on apple juice products it purchased from defendant Apple Marketing Co-op, Inc. ("Apple Marketing"), formerly Red Cheek, Inc. ("Red Cheek").

Specifically, defendants contend that this state complaint is merely a rerun of plaintiffs' complaint under the federal Robinson-Patman Act, 15 U.S.C.A. § 13 et seq., which was dismissed by the United States District Court for the District of New Jersey ("district court"), and, in any event, this count fails to state a cause of action for two reasons: First, the New Jersey act does not regulate, nor provide any remedy for, alleged price discrimination. The act contains no provision remotely resembling the Robinson-Patman Act, but rather is modeled after the federal Sherman Antitrust Act, 15 U.S.C.A. § 1 et seq., which neither regulates nor prohibits price discrimination; and secondly, plaintiffs' price discrimination claim is barred under the doctrines of res judicata and collateral estoppel because the district court dismissed on the merits the exact same antitrust claim that plaintiffs assert here.

DESCRIPTION OF THE PARTIES.

Plaintiff Gregory Marketing Corporation is a food brokerage firm which served as a broker for Red Cheek for a number of years. Plaintiff Daniel Scher is an officer of Gregory and its majority shareholder and sues solely in that capacity.

Defendant Wakefern is a corporation organized on the cooperative plan that provides certain services, including bulk purchasing, for its members who own and operate "Shop-Rite" supermarkets.

Defendant Apple Marketing Co-op, Inc., formerly Red Cheek, Inc. ("Red Cheek"), a manufacturer of apple juice products, had a long standing agreement with Gregory to introduce or otherwise broker Red Cheek products in an assigned territorial market.

THE PRIOR FEDERAL ACTION.

The present action is virtually identical in factual allegations to a prior federal action that was brought in the United States District Court for the District of New Jersey ("federal action"), seeking damages arising out of the alleged price discrimination scheme of defendants. Plaintiffs sought damages based upon violations of federal antitrust statutes as well as a variety of state claims.

Both actions are being litigated by the same plaintiffs, against the same defendants, and, most importantly, concern the same alleged transactions and occurrences.

THE PRICE DISCRIMINATION CLAIMS.

The federal action and the present action contain identical price discrimination claims against Wakefern. Whereas the claim in the federal action sought relief under both the federal Robinson-Patman Act and the New Jersey Antitrust Act, the claim in the instant action seeks relief under only the New Jersey act.

According to plaintiffs' allegations in both actions, "Wakefern utilized its dominant position in the marketplace to induce Red Cheek to discriminate in price between different purchasers of products of like grade and quality." Specifically, plaintiffs allege that: (1) from February through July 1984, while all other Red Cheek customers were paying $11.85 a case for Red Cheek's 40 ounce, natural apple juice, Wakefern was allegedly receiving one case gratis for each case purchased; and (2) from June through August 1984, Wakefern allegedly received a $1.86 discount on Red Cheek's one-half gallon clear and natural promotion when other Red Cheek customers were receiving no discount. Plaintiffs allege that these allegedly discriminatory pricing practices were intended to injure competition in the marketplace and damage Gregory; and that Wakefern knew that the price discrimination was not cost justified.

Plaintiffs further allege that when Scher became aware of the discriminatory pricing practices, he then informed Red Cheek of the wrongful nature of these alleged practices, and Red Cheek nonetheless directed him to supply customers who inquired about the practices with fabricated explanations. Plaintiffs allege that Scher refused to comply with these directives and, as a result thereof, Red Cheek terminated Gregory as a broker.

DISMISSAL OF THE FEDERAL ACTION.

The district court dismissed the federal antitrust claim in the federal action for lack of antitrust standing and lack of antitrust injury under § 4 of the Clayton Act, 15 U.S.C.A. § 15, which creates the federal private antitrust remedy. In doing so, the district court held:

The claimed violation of the antitrust laws here is based on the preferential price given to Wakefern by Red Cheek. The anticompetitive effect of such actions is on those competitors of Wakefern's that did not receive the price cuts.

Plaintiffs' injuries of lower commissions and the breach of its contract are not injuries received by reason of that which made defendant's actions unlawful.

....

Plaintiffs make no claim that they are customers or competitors in the competition in the sale of food. Plaintiffs are brokers and obtain a commission regardless of which food buyer uses its food brokerage services. A reduction in competition in the sale of food does not necessarily reduce their commissions. Plaintiffs may be injured by defendants' actions, but the injury is not the type of injury that the antitrust laws were written to guard against.

....

As plaintiffs' Federal antitrust claim is their only basis for Federal jurisdiction, plaintiffs' Complaint now fails to allege any basis for Federal jurisdiction. Under United Mine Workers v. Gibbs, 383 U.S. 715 [86 S.Ct. 1130, 16 L.Ed.2d 218] (1966) the pendent State law claims must accordingly also be dismissed, including plaintiff's State Antitrust claim. And plaintiff is, therefore, relegated to the State Courts for relief on these claims. [Emphasis supplied]

Judge Ackerman refused to dismiss count three (the state antitrust claim) with prejudice. Instead, the state antitrust claim was treated like the other state law claims set forth in the federal complaint, i.e., it was dismissed for lack of subject matter jurisdiction under Fed.R.Civ.P. 12(b)(1). Thus, no determination on that count was made on the merits. Plaintiffs' appeal of that dismissal is pending in the Third Circuit Court of Appeals.

Plaintiffs now seek to maintain the identical antitrust claim under the New Jersey act. However, the section of the state act which creates the private antitrust cause of action, N.J.S.A. 56:9-12(a), is the mirror image of § 4 of the Clayton Act under which the district court held plaintiffs had no standing.

THE FIRST COUNT FAILS TO STATE A CLAIM FOR PRICE

DISCRIMINATION UNDER THE NEW JERSEY ANTITRUST ACT.

Plaintiffs' complaint for alleged unlawful price discrimination fails to state a cause of action under the New Jersey act. The New Jersey act has no counterpart to the federal Robinson- Patman Act, 15 U.S.C.A. § 13, and simply does not regulate discriminatory practices. See 1 CCH Trade Regulation Reporter, p 3510 (listing states which have enacted price discrimination legislation). As a state deputy attorney general has written, "[t]he [state's antitrust] Act does not contain a section dealing ... with price discrimination." Frank, "An Overview of the New Jersey Antitrust Act," 108 N.J.L.J. 293, 305 (Oct. 1, 1981). ²

The absence of any general price discrimination remedy is underlined by the fact that the Legislature has seen fit to enact specific price discrimination statutes for specific industries. See, e.g., N.J.S.A. 17:29A-4 (insurance rates); N.J.S.A. 33:1-89 (alcoholic beverages); N.J.S.A. 56:6-22 (motor fuel). ³ If a price discrimination remedy were provided by the New Jersey Act, such specified provisions would not be necessary. No comparable price discrimination statute governs the sale of apple juice or related products. Thus, plaintiffs fail to state a claim under the New Jersey Act. See O'Shaughnessy, "Analysis of Federal and State Antitrust Law," 101 N.J.L.J. 462, 463 (May 11, 1978) ("if a complaint is a pure price discrimination charge ..., the only relief available is under the federal [antitrust] statutes.").

Despite no state price-discrimination statute, plaintiffs attempt to allege a claim under §...