Wales Home Remodeling Co., Inc. v. Alside Aluminum Corp.

• Decision Date: 30 January 1978
• Docket Number: Civ. A. No. 75-C-682.
• Citation: 443 F. Supp. 908
• Parties: WALES HOME REMODELING CO., INC., Plaintiff, v. ALSIDE ALUMINUM CORP., a/k/a Alside, Inc., and Tri-State Home Improvement Company, Inc., Defendants.
• Court: U.S. District Court — Eastern District of Wisconsin

443 F. Supp. 908

WALES HOME REMODELING CO., INC., Plaintiff, v. ALSIDE ALUMINUM CORP., a/k/a Alside, Inc., and Tri-State Home Improvement Company, Inc., Defendants.

Civ. A. No. 75-C-682.

United States District Court, E. D. Wisconsin.

January 30, 1978.

COPYRIGHT MATERIAL OMITTED

Herbert L. Usow, Timothy K. Tollaksen, Milwaukee, Wis., for plaintiff.

Robert A. DuPuy, Milwaukee, Wis., for defendant Alside Aluminum Corp., a/k/a Alside, Inc.; William J. McKim, U. S. Steel Corp., Pittsburgh, Pa., James R. Bussman, Alside, Inc., Akron, Ohio, of counsel.

Robert A. Levine, Milwaukee, Wis., for defendant Tri-State Home Improvement Co., Inc.

DECISION AND ORDER

REYNOLDS, Chief Judge.

This action is an anti-trust action for treble damages. Plaintiff Wales Home Remodeling Co., Inc. ("Wales"), a Wisconsin corporation, is engaged in the business of selling at retail and installing residential steel siding. The defendant Alside, Inc. ("Alside"), a foreign corporation, is a subsidiary of the United States Steel Company and is engaged in the business of manufacturing and selling to wholesalers and retailers steel siding under the brand names "Sawkerf" and "Satinwood", as well as siding accessories. The defendant Tri-State Home Improvement Co., Inc. ("Tri-State"), a Wisconsin corporation, is engaged in the business of selling at retail and installing residential steel siding.

The action is presently before the Court on plaintiff's motion for leave to amend its first amended complaint and the defendants' motions for summary judgment. For the reasons hereafter stated, the plaintiff's motion will be denied and the defendants' motions will be granted.

On February 26, 1976, the plaintiff filed its first amended complaint, alleging therein that the defendants have violated Sections 1 and 2 of the Sherman Anti-Trust Act, 15 U.S.C. Sections 1 and 2, and Sections 2(a) and (c) of the Clayton Act, as amended by the Robinson-Patman Act, 15 U.S.C. Section 13(a) and (c). Plaintiff claims that it has been engaged in the residential steel siding business in Milwaukee since 1970, that defendant Tri-State entered the Milwaukee residential steel siding market in 1971 and 1972, and that since that time, Tri-State has enjoyed an exclusive direct purchase relationship with defendant Alside in reference to Alside steel siding in the Milwaukee area. As appears from the depositions and affidavits submitted, the exclusive arrangement in fact relates only to Alside Satinwood siding. Plaintiff further alleges that it has requested a similar direct purchase arrangement with Alside and has been refused, and as a result of such refusal it has been forced to purchase Alside siding through Central Building Products, Inc. ("Central"), a Wisconsin corporation, which is the only Milwaukee area wholesale distributor of Alside steel siding, at a cost at least 15% above that at which Tri-State is able to purchase Alside siding. Plaintiff alleges that Alside siding has superior salability to other brands, and that in result Tri-State, because of its direct purchase arrangement with Alside, has acquired a controlling share of the retail residential steel siding market in Milwaukee.

The anti-trust law violations which plaintiff alleges in its first amended complaint are, specifically, as follows: (1) that the cost savings to Tri-State which resulted from its exclusive direct purchase arrangement with Alside constitute price discrimination in violation of Sections 2(a) and 2(c) of the Clayton Act, as amended by the Robinson-Patman Act; and (2) that by virtue of the foregoing Alside and Tri-State did knowingly and unlawfully combine, conspire and agree with each other and with diverse other persons to restrain and monopolize the sale and application of residential steel siding in the Milwaukee, Wisconsin area, in violation of Sections 1 and 2 of the Sherman Anti-Trust Act, 15 U.S.C. Sections 1 and 2. Plaintiff alleges that in result of such acts, plaintiff's steel siding business has been reduced by more than 65% since 1972, to plaintiff's damage in 1972, 1973, 1974 and 1975 in the amount of $500,000, wherefor plaintiff seeks treble damages in the amount of $1,500,000 pursuant to Section 4 of the Clayton Act, 15 U.S.C. Section 15.

The defendants Alside and Tri-State moved for summary judgment in this action on July 18, 1977, and July 22, 1977, respectively. Thereafter on July 25, 1977, the plaintiff filed a motion for leave to amend its first amended complaint. The proposed second amended complaint repeats the allegations contained in the first amended complaint and in addition alleges a violation of Section 2(d) of the Clayton Act, as amended by the Robinson-Patman Act, to wit: that Alside has at all times material discriminatorily paid money to Tri-State in the form of credits to reimburse Tri-State for the sales of Alside residential steel siding and has never made such payments available to any other residential steel siding dealers in the Milwaukee area.

Rule 15(a) of the Federal Rules of Civil Procedure provides that leave to amend shall be freely given when justice so requires. The defendants argue that leave should be denied in this matter (1) because plaintiff was dilatory in filing the motion; (2) because the amended complaint is without merit; and (3) because it is unintelligible. The Court agrees that leave to amend should be denied, for the reason, however, that given the circumstances of this action it would be unjust to permit the plaintiff to amend its complaint subsequent to the defendants having filed motions for summary judgment.

The grant of leave to amend pleadings is within the discretion of the trial court. Zenith Radio Corp. v. Hazeltine Research, Inc., 401 U.S. 321, 330, 91 S.Ct. 795, 28 L.Ed.2d 77 (1970). In Kirby v. P. R. Mallory & Co., Inc., 489 F.2d 904 (7th Cir. 1973), in upholding the trial court's refusal to permit amendment of a complaint to insert a Clayton Act Section 3 claim after the defendant had moved for summary judgment, the Court of Appeals for the Seventh Circuit stated at 912:

". . . It is clearly unfair to Mallory to permit Kirby to remain mute for this period and then to bolster his pleadings to prevent an anticipated adverse judgment . . ."

Although the plaintiff here did not become aware of the facts on which it purports to base its proposed new claim until four months before filing the motion to amend, as opposed to two and one-half years in Kirby, the Court is of the opinion that in this case as well it would be unfair to the defendants to allow the plaintiff to prevent an anticipated adverse judgment through the method of amending its complaint. This is particularly so since the plaintiff will not be foreclosed by the statute of limitations from pursuing its claim in a new action.

The defendants have moved for summary judgment with respect to the Robinson-Patman Act claims set forth in the plaintiff's first amended complaint on the basis that the complaint fails to state a cause of action under those Acts. Section 2(a) of the Clayton Act, as amended by the Robinson-Patman Act, 15 U.S.C. Section 13(a), provides in part:

"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. * * *"

Defendants argue that, since Alside has not sold Satinwood steel siding to Wales at any time material to the complaint, Wales is not a "purchaser" within the meaning of 15 U.S.C. Section 13(a). The Court agrees.

It is undisputed that Wales has not purchased Satinwood siding directly from Alside. See Paragraphs 8 and 9 of the first amended complaint; Wales deposition of March 26, 1976, at 9-10, 14-20, 68-69. "`The term purchaser . . . does not mean one who seeks to purchase . . . (I)t does not mean a prospective purchaser, or one who wishes to purchase . . .'" Chicago Seating Co. v. S. Karpen & Bros., 177 F.2d 863, 867 (7th Cir. 1949), quoting Shaw, Inc. v. Wilson-Jones, Co., 105 F.2d 331 (3d Cir. 1939). See also Klein v. Lionel Corporation, 138 F.Supp. 560 (D.Del.1956), aff'd, 237 F.2d 13, wherein the district court stated at 566:

"* * * (A) plaintiff has no cause of action for discrimination under 15 U.S. C.A. Section 13(a), where it appears that the plaintiff was not a purchaser from the seller but a retailer purchasing from a jobber * * *"

An outright refusal to sell to one customer also does not constitute a Robinson-Patman Act violation. Mullis v. ARCO Petroleum Corporation, 502 F.2d 290, 294 (7th Cir. 1974); F. Rowe, Price Discrimination Under the Robinson-Patman Act, 45 (1966).

Plaintiff Wales argues that it is a purchaser within the meaning of 15 U.S.C. Section 13(a) by virtue of the "indirect purchaser" doctrine, since it purchased from Central States, Inc., which is the exclusive wholesale purchaser from Alside in the Milwaukee area. The indirect purchaser doctrine provides that, although the actual sale takes place through an intermediary, if a manufacturer in fact deals directly with a purchaser of its products by controlling the terms upon which the purchaser buys, then that purchaser will be within the terms of 15 U.S.C. Section 13(a). Checker Motors Corporation v. Chrysler Corporation (S.D.N. Y.1968), 283 F.Supp. 876, 887, aff'd, 405...