Hoover Color Corp. v. Bayer Corp.
| Decision Date | 30 July 1998 |
| Docket Number | No. Civ.A. 98-0841-R.,Civ.A. 98-0841-R. |
| Citation | 24 F.Supp.2d 571 |
| Parties | HOOVER COLOR CORPORATION, Plaintiff, v. BAYER CORPORATION, Defendant. |
| Court | U.S. District Court — Western District of Virginia |
Dennis P. Brumberg, Richard H. Wall, Brumberg, Mackey & Wall, P.L.C., Roanoke, VA, Margaret K. Garber, Brumberg, Mackey & Wall, P.L.C., Roanoke, VA, for Hoover Color Corporation, plaintiff.
Michael F. Urbanski, Woods, Rogers & Hazlegrove, P.L.C., Roanoke, VA, William B. Poff, Woods, Rogers & Hazlegrove, P.L.C., Roanoke, VA, Thomas Demitrack, Mary E. Sweeney, Susanne H. Deegan, Jones, Day, Reavis & Pogue, Cleveland, OH, for Bayer Corporation, defendant.
This case involves a claim of price discrimination in violation of the Clayton Act, ch. 323, § 2, 38 Stat. 730 (1914), as amended by the Robinson-Patman Act, ch. 592, § 1, 49 Stat. 1526 (1936) (). Before me now is defendant's motion for summary judgment. The parties have fully briefed the issues involved, and have presented oral argument. The motion is, therefore, ripe for disposition. For the reasons contained herein, defendant's motion for summary judgment is GRANTED.
Bayer [formerly known as Miles; formerly known as Mobay] produces and sells synthetic iron oxide pigments under the trade name "Bayferrox." Bayferrox is used in various segments of the pigment industry, but primarily in the construction products segment, the coatings segment, and the plastics segment.1 Bayer sells Bayferrox directly to end-users. During the time of the alleged price discrimination, Bayer also sold Bayferrox to distributors who then resold the Bayferrox to subdistributors and end-users. Hoover Color Corporation, Rockwood Industries [also known as Davis Colors; also known as Mineral Pigments],2 and Landers-Segal Color Company [hereinafter Lansco] were distributors of Bayferrox.
Hoover claims that, from 1992 through 1996, Bayer sold Bayferrox to Rockwood and Lansco at lower net prices per pound than to Hoover.3 These lower prices occurred as a result of a volume discount schedule which Bayer has included in its distributor contracts since 1980.4 All three distributors purchased under the same basic discount schedule. Rockwood and Lansco purchased higher volumes of Bayferrox than Hoover, thus, they were able to obtain the pigment at a lower net price per pound. Hoover contends that, by way of the operation of the discount mechanism, the prices paid by Rockwood and Lansco, while theoretically available to all distributors, were functionally available only to Rockwood and Lansco.
Under the discount mechanism, a distributor's price per pound of Bayferrox for a given year was set at the beginning of that year.5 A distributor's discounted price for the given year was based upon the amount of Bayferrox purchased by the distributor during the previous year. If the distributor actually purchased more in the given year than it had in the previous year, then Bayer would reimburse the distributor for the amount of discount actually earned. The reimbursement would be paid by March of the next year. If the distributor purchased less than had been anticipated, however, it would have to return a portion of the estimated discount to Bayer.
For example, if Hoover had purchased four million pounds of Bayferrox in 1988, then it would have received the corresponding two percent discount in 1989.6 If Hoover bought six million pounds in 1989, then by March of 1990, it would be reimbursed the difference between the 2% discount Bayer estimated Hoover would earn and the 3% discount Hoover actually earned. If, however, Hoover only purchased two million pounds, then it would be required to reimburse Bayer for its failure to purchase sufficient Bayferrox to earn the 2% discount.
Hoover claims that the discount mechanism prevented uniform pricing at the beginning of each year. According to Hoover, the fact that it would not receive a rebate on its discount for fifteen months prohibited it from purchasing an increased volume of Bayferrox. In other words, Hoover contends that the method of setting a discount for a given year based on the volume purchased in the prior year rendered the higher volumes functionally unavailable to Hoover and, thereby, denied Hoover the opportunity to purchase at the same price as Lansco or Rockwood.
Hoover brings this action for price discrimination under § 2(a) of the Clayton Act, as amended by the Robinson-Patman Act. That section provides as follows:
It shall be unlawful for any person engaged in commerce, in the course of such commerce, either directly or indirectly, to discriminate in price between different purchasers of commodities of like grade and quality, where either or any of the purchases involved in such discrimination are in commerce, where such commodities are sold for use, consumption, or resale within the United States or any Territory thereof or the District of Columbia or any insular possession or other place under the jurisdiction of the United States, and where the effect of such discrimination may be substantially to lessen competition or tend to create a monopoly in any line of commerce, or to injure, destroy, or prevent competition with any person who either grants or knowingly receives the benefit of such discrimination, or with customers of either of them....
15 U.S.C.A. § 13(a).
A plaintiff must prove several elements to hold a seller liable for price discrimination under § 2(a). First, the seller must be "engaged in commerce," the price discrimination must occur "in the course of such commerce," and at least one of the sales constituting the discrimination must occur "in commerce." Second, the discrimination must involve contemporaneous "sales" to two or more purchasers at different prices. Third, the items sold must be "commodities of like grade and quality." Fourth, there must be a reasonable possibility that the discriminatory prices will substantially lessen competition, or injure, destroy, or prevent competition. Additionally, in order to recover damages under § 4 of the Clayton Act, a private plaintiff who has proved a violation of § 2(a) must also demonstrate that it suffered actual injury to its business or property as a result of the price discrimination. See, e.g., Texaco, Inc. v. Hasbrouck, 496 U.S. 543, 556, 110 S.Ct. 2535, 110 L.Ed.2d 492 (1990) (); Falls City Indus., Inc. v. Vanco Beverage, Inc., 460 U.S. 428, 434-38, 103 S.Ct. 1282, 75 L.Ed.2d 174 (1983) (discussing § 2(a) damages); J. Truett Payne Co., Inc. v. Chrysler Motors Corp., 451 U.S. 557, 561-62, 101 S.Ct. 1923, 68 L.Ed.2d 442 (1981) ().
Bayer brings the present motion for summary judgment. For the purposes of this motion, Bayer admits that: (1) Bayferrox is a commodity; (2) Bayer sold Bayferrox in interstate commerce to Rockwood, Lansco, and Hoover; (3) the Bayferrox sold to Rockwood, Lansco, and Hoover was of like grade and quality; and (4) Bayer contemporaneously sold Bayferrox to Rockwood, Lansco, and Hoover at different prices.
In its motion, Bayer argues that Hoover has failed to put forward any evidence to support its damages claims. First, Bayer contends that Hoover's evidence fails to demonstrate that the price differentials had any reasonable possibility of substantially injuring competition under § 2(a). Second, Bayer contends that even if Hoover could establish a violation of § 2(a), Hoover produced no evidence that its business or property has suffered a § 4 injury as a result of the price differential.
In addition to challenging Hoover's ability to establish a prima facie claim of price discrimination, Bayer asserts that it has established two affirmative defenses, either of which would defeat plaintiff's claim. First, Bayer asserts that the lower prices for Rockwood and Lansco were legal under § 2(b) because they were "made in good faith to meet an equally low price of a competitor. ..." 15 U.S.C.A. 13(b). Second, Bayer asserts that Rockwood's and Lansco's prices were functionally available to Hoover since they purchased Bayferrox under the same basic discount schedule.
For the purposes of this motion, I will assume without deciding, that Hoover has come forward with sufficient evidence to state a prima facie case for price discrimination. Having assumed that Hoover has set forth a prima facie case of price discrimination, I will examine Bayer's claimed affirmative defenses. In granting the motion for summary judgment, I only need to discuss the "meeting competition" defense of § 2(b).7
Summary judgment is appropriate where there is no genuine issue as to any material fact and the moving party is entitled to judgment as a matter of law. Fed.R.Civ.P. 56(c). Where the record taken as a whole could not lead a rational trier of fact to find for the nonmoving party, there is no genuine issue for trial and summary judgment should be granted. Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 587, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986). In considering a motion for summary judgment, Shaw v. Stroud, 13 F.3d 791, 798 (4th Cir.) (citations omitted), cert. denied, 513 U.S. 813, 115 S.Ct. 67, 130 L.Ed.2d 24 (1994). There is a genuine issue of fact "if the evidence is such that a reasonable jury could return a verdict for the nonmoving party." Anderson v. Liberty Lobby, 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986).
...
To continue reading
Request your trial