Insulate SB, Inc. v. Advanced Finishing Sys., Inc., No. 14-2561 (8th Cir. 2015)
Annotate this CaseGraco manufactures fast-set spray foam equipment (FSE) and sells it to distributors, who resell to consumers like Insulate. In 2005 and 2008 Graco purchased competing FSE manufacturers, ultimately raising its market share “to above 90%.” In 2007, Graco sent a letter to its distributors citing the “best efforts” clause in its distributor agreements, stating: It is our opinion that taking on an additional competitive product line may significantly reduce the “best efforts” of a Graco distributor.” In 2009, Foampak, a Graco distributor, considered carrying Gama products but chose not to after Graco threatened to end its distributorship. Graco sued Gama, alleging theft of trade secrets; Gama counterclaimed that Graco had unilaterally monopolized the FSE market (Sherman Act, 15 U.S.C. 2). In 2013, the FTC accused Graco of unlawfully acquiring its competitors (Clayton Act, 15 U.S.C. 18). Graco and the FTC entered a consent agreement which confirmed Graco would not engage in any practice “that has the purpose or effect of achieving Exclusivity with any Distributor.” The agreement did “not constitute an admission by [Graco] that the law ha[d] been violated.” Insulate filed suit. The Eighth Circuit affirmed dismissal on the pleadings. Insulate did not adequately plead concerted action in the existence of written anticompetitive contracts or implied exclusivity agreements.
Court Description: Riley, Author, with Murphy and Melloy, Circuit Judges] Civil case - Antitrust. Indirect purchasers may bring an antitrust claim if they alleged the direct purchasers are party to the antitrust violation and join the direct purchasers as defendants; however, plaintiff has failed to state a claim as it has failed to plead that Graco entered into explicit exclusivity agreements with any of its distributors; nor had plaintiff sufficiently pleaded the existence of a conspiracy or agreement to take concerted action; claims under Minnesota and California state antitrust laws were properly dismissed for failure to state a claim.
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