Sioux City Truck & Trailer, Inc. v. Ziegler, Inc.

• Decision Date: 05 December 2016
• Docket Number: No. 16-CV-4106-LRR,16-CV-4106-LRR
• Parties: SIOUX CITY TRUCK AND TRAILER, INC., Plaintiff, v. ZIEGLER, INC., Defendant.
• Court: U.S. District Court — Northern District of Iowa

SIOUX CITY TRUCK AND TRAILER, INC., Plaintiff, v. ZIEGLER, INC., Defendant.

No. 16-CV-4106-LRR

UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF IOWA WESTERN DIVISION

December 5, 2016

ORDER

TABLE OF CONTENTS

I. INTRODUCTION ....................................... 1

II. RELEVANT PROCEDURAL HISTORY ....................... 1

III. RELEVANT FACTUAL BACKGROUND ....................... 2

A. Parties .......................................... 2

B. Agreement ....................................... 2

C. Dispute ......................................... 3

IV. ANALYSIS ........................................... 4

A. Applicable Standard ................................. 4

B. RPA ........................................... 5

C. State Law Claims .................................. 10

V. CONCLUSION ....................................... 11

I. INTRODUCTION

The matter before the court is Defendant Ziegler, Inc.'s ("Ziegler") "Motion to Dismiss Pursuant to Fed. R. Civ. P. 12(b)(6)" ("Motion") (docket no. 9).

II. RELEVANT PROCEDURAL HISTORY

On July 6, 2016, Plaintiff Sioux City Truck and Trailer, Inc. ("SCTT") filed a Petition (docket no. 3) in the Iowa District Court for Woodbury County alleging three claims against Ziegler: (1) breach of good faith and fair dealing, (2) violation of the Robinson-Patman Act ("RPA") and (3) violation of Iowa franchise law.¹ On July 27, 2016, Ziegler removed the case pursuant to the court's original federal question jurisdiction over the RPA claim and supplemental jurisdiction over the remaining claims, bringing the Petition before the court. See Notice of Removal (docket no. 2). On August 3, 2016, Ziegler filed the Motion. On August 22, 2016, SCTT filed a Resistance (docket no. 14). On August 25, 2016, Ziegler filed a Reply (docket no. 16). Neither party requests oral argument and the court finds that oral argument is unnecessary. The matter is fully submitted and ready for decision.

III. RELEVANT FACTUAL BACKGROUND

Accepting all factual allegations in the Amended Complaint as true and drawing all reasonable inferences in favor of SCTT, the facts are as follows.

A. Parties

SCTT is a South Dakota corporation with its principal place of business in Sioux City, Iowa. Petition ¶ 1. Ziegler is a Minnesota corporation with its principal place of business in Minneapolis, Minnesota. Id. ¶ 2.

B. Agreement

On or about March 31, 2014, SCTT and Ziegler entered into an "Engine Parts and Service Agreement" ("Agreement"), which granted SCTT the right to buy various CAT brand machinery parts from Ziegler and to service various models of machinery. Id. ¶ 3; see also Agreement (docket no. 3-1).² The Agreement was the most recent in a history ofsimilar agreements, under which SCTT and Ziegler maintained a contractual relationship since the 1980s. Petition ¶ 4. The Agreement provided for a variety of rights and obligations relating to Ziegler's sale of parts to SCTT—including provisions about purchase price, minimum inventories and the training of SCTT technicians regarding use of the parts when servicing machinery. See generally Agreement. The Agreement also permits either party to terminate the Agreement "at any time, with or without cause, upon thirty (30) days written notice mailed to the other party." Agreement ¶ 21. By its terms, the Agreement contemplated expiration after one year. See Agreement ¶ 32.

C. Dispute

On February 16, 2016, Ziegler emailed SCTT to negotiate a new agreement. Petition ¶ 6. Ziegler's proposed new agreement would reclassify SCTT as a "parts dealer," which would amount to a "reduced" role compared to SCTT's "full service" status under the Agreement. Id. Under the proposed "parts dealer" agreement, Ziegler would charge SCTT higher prices for parts than it charged under the Agreement. Id. ¶ 21. In the email, Ziegler stated that it would terminate its relationship with SCTT if it did not agree to the proposed "parts dealer" agreement. Id. ¶ 7. SCTT alleges that none of SCTT's regional competitors saw their rights reduced or terminated by Ziegler and that, unlike SCTT, their previously entered agreements remained in effect. Id. ¶ 14. SCTT apparently did not agree to the proposed "parts dealer" agreement. See generally id. However, on March 8, 2016, counsel for SCTT sent a letter informing Ziegler that SCTT would cure any perceived performance deficiencies under the Agreement. Id. ¶ 8. Zieglerdid not respond to the letter. Id. ¶ 9. On May 6, 2016, Ziegler sent a letter to SCTT notifying SCTT that Ziegler was terminating the Agreement, effective thirty days after the date of the letter. Id. ¶ 10; see also Termination Letter (docket no. 3-2). The termination letter did not include, and Ziegler did not otherwise provide, any notice of cause for its termination of the Agreement. Petition ¶ 12.

IV. ANALYSIS

In the Motion, Ziegler argues that all three claims in the Petition should be dismissed with prejudice pursuant to Federal Rule of Civil Procedure 12(b)(6) for failure to state a claim upon which relief can be granted. Motion at 1.

A. Applicable Standard

The Federal Rules of Civil Procedure provide for dismissal of a complaint for "failure to state a claim upon which relief can be granted." Fed. R. Civ. P. (12)(b)(6). When analyzing a Rule 12(b)(6) motion, the court must accept all of the factual allegations in the complaint as true. See Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) ("[F]or the purposes of a motion to dismiss [the court] must take all of the factual allegations in the complaint as true."). To survive a motion to dismiss under Rule 12(b)(6), "a complaint must contain sufficient factual matter . . . to 'state a claim to relief that is plausible on its face.'" Id. (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). "A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Varga v. U.S. Bank Nat'l Ass'n, 764 F.3d 833, 838-39 (8th Cir. 2014) (quoting Iqbal, 556 U.S. at 678). This standard requires a complaint to "contain factual allegations sufficient 'to raise a right to relief above the speculative level.'" Parkhurst v. Tabor, 569 F.3d 861, 865 (8th Cir. 2009) (quoting Twombly, 550 U.S. at 555). "Where the allegations show on the face of the complaint [that] there is some insuperable bar to relief, dismissal under Rule 12(b)(6) is appropriate." Benton v. Merrill Lynch & Co., Inc., 524 F.3d 866, 870 (8thCir. 2008). "Where . . . claims relate to a written contract that is part of the record in the case, [courts] consider the language of the contract when reviewing the sufficiency of the complaint." M.M. Silta, Inc. v. Cleveland Cliffs, Inc., 616 F.3d 872, 876 (8th Cir. 2010).

B. RPA

Because the court's original jurisdiction derives from the federal RPA claim, see Notice of Removal, the court begins by addressing that claim.

The RPA makes it unlawful

for any person engaged in commerce . . . 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 . . . , and where the effect of such discrimination may be substantially to lessen competition . . . .

15 U.S.C. § 13(a). An RPA claim alleging "price discrimination that injures competition among the discriminating seller's customers"—referred to as a secondary line claim—must satisfy the following elements: (1) the seller sold its products in interstate commerce; (2) the products were "of like grade and quality"; (3) the seller discriminated in price between a favored and a disfavored purchaser; and (4) the price discrimination is such that it may injure competition to the advantage of the favored purchaser. Volvo Trucks N. Am. v. Reeder-Simco GMC, Inc., 546 U.S. 164, 176-77 (2006) ("Reeder-Simco II"). With respect to the third element, "[a]t least two transactions must take place in order to constitute a [violation of the RPA]." Bruce's Juices v. American Can Co., 330 U.S. 743, 755 (1947) ("Bruce's Juices I"). To satisfy this so-called two-purchaser rule, a plaintiff must allege "actual sales at two different prices to two different actual buyers." Fusco v. Xerox Corp., 676 F.2d 332, 335 (8th Cir. 1982) (quoting M.C. Mfg. Co. v. Tex. Foundries, Inc., 517 F.2d 1059, 1065 (5th Cir. 1975)); see also 15 U.S.C. § 13(a) (referring to discrimination "between different purchasers"). "[A] sale at one price pluseither an offer to sell at a higher price or a refusal to sell at any price is generally thought not to violate the [RPA]." Id.

Ziegler argues that, because SCTT did not accept the proposed "parts dealer" agreement containing higher prices, the proposal amounted to a mere "offer to sell at a higher price" and is inactionable under the RPA because it fails to satisfy the two-purchaser rule. See "Ziegler's Memorandum of Law in Support of the Motion" ("Ziegler Brief") (docket no. 9-1) at 11. SCTT resists Ziegler's argument by pointing to an exception to the two-purchaser rule that originated in American Can Co. v. Bruce's Juices, 187 F.2d 919 (5th Cir. 1951) ("Bruce's Juices II"). See "Memorandum of Authorities in Support of Resistance" ("SCTT Brief") (docket no. 14-1) at 9-10. In Bruce's Juices II, the Fifth Circuit held that a plaintiff may satisfy the two-purchaser requirement even if it did not in fact purchase goods at a disfavored price if "its failure to do so was directly attributable to defendant's own discriminatory practice." Bruce's Juices II, 187 F.2d at 924. Numerous courts have soundly rejected the Bruce's Juices II exception. See, e.g., Maier-Schule GMC, Inc. v. Gen. Motors Corp., 780 F. Supp. 984, 990 (W.D.N.Y. 1991) ("[C]ourts have rejected the claim that the [RPA's] purchaser requirement is inapplicable where the plaintiff's failure to purchase the relevant commodity allegedly stems...