JW Burress, Inc. v. JLG Industries, Inc., 491 F. Supp. 15 (W.D. Va. 1980)

U.S. District Court for the Western District of Virginia - 491 F. Supp. 15 (W.D. Va. 1980)
March 11, 1980

491 F. Supp. 15 (1980)

J. W. BURRESS, INCORPORATED, Plaintiff,
v.
JLG INDUSTRIES, INC. (formerly known as Fulton Industries, Inc.), Defendant.

Civ. A. No. 79-0170.

United States District Court, W. D. Virginia, Roanoke Division.

March 11, 1980.

Charles D. Fox, III, Woodward, Fox & Wooten, Roanoke, Va., for plaintiff.

Edward Fitzpatrick, Lord, Bissell & Brook, Chicago, Ill., James F. Johnson, Woods, Rogers, Muse, Walker & Thornton, Roanoke, Va., for defendant.

 
*16 OPINION

TURK, Chief Judge.

Plaintiff, J. W. Burress, Inc., sues JLG Industries, Inc., alleging violations of the federal antitrust laws and breach of contract. The case is now before the court on JLG's motion for judgment on the pleadings as to certain of Burress's claims of price discrimination in alleged violation of the Robinson-Patman Act. 15 U.S.C. § 13 et seq.

To the extent relevant here, the Robinson-Patman Act provides as follows:

 
It shall be unlawful for any person . . to discriminate in price between different purchasers of commodities of like grade or quality . . .; [However,] nothing herein contained shall prevent persons engaged in selling goods, wares or merchandise in commerce, from selecting their own customers in bona fide transactions and not in restraint of trade....

15 U.S.C. § 13(a).

The court, for purposes of ruling on defendant's motion, must assume of course that the plaintiff's factual allegations are true. 2A Moore's Federal Practice ¶ 12.15 (2d ed. 1979).

Defendant JLG, a Pennsylvania corporation, is a manufacturer of self-lifting work platforms. These platforms are designed to position men, tools, or materials in elevated work areas. Pursuant to a contract with JLG, plaintiff Burress was a distributor for these products in southwestern Virginia until April 30, 1978.

In advancing its claims of unlawful price discrimination, plaintiff focuses on a time period commencing on March 22, 1976, the date of the execution of the final distributorship agreement between JLG and Burress, and ending on April 30, 1978, the date contractual relations ceased. Plaintiff Burress asserts basically two Robinson-Patman violations, both arising from events of this period of time.

The sufficiency of the first set of Burress's factual allegations of unlawful price discriminationthe allegations of paragraph 10 of the complaintapparently is not disputed.[1] It will be useful briefly to review those allegations as a backdrop to the dispute now before the court. Paragraph 10 of the complaint alleges that during the latter half of 1977 and thereafter the plaintiff purchased several of the platform lift units from JLG. It is alleged that JLG provided these units to the plaintiff under different terms than it provided similar units to other purchasers. This practice, it is alleged, "had the effect of discriminating in price" between the plaintiff as a purchaser of the lift units and other purchasers of similar lift units of like grade and quality. These other purchasers allegedly were in competition with the plaintiff in interstate commerce. As noted already, the adequacy of these allegations is apparently not controverted.

The real dispute at this stage of the case concerns the viability of the allegations of paragraph 11 of the complaint.

In paragraph 11, the complaint sets forth another set of incidents which are said to give rise to liability under the Robinson-Patman Act. It is alleged that in September 1977 JLG "attempted to coerce" the plaintiff into entering a new distributorship agreement. The terms of the proposed new agreement "differed substantially" from those of the March 22, 1976 agreement, which in September 1977 was still in effect. The complaint states that "JLG offered this new contract to Burress while it was offering contracts which were substantially different in their terms to other purchasers *17 and distributors in competition with Burress. . . ." The contracts of other purchasers, it is alleged, were "discriminatory toward Burress" and the defendant's conduct "had the effect of increasing the price of the items Burress had purchased in the past or would purchase in the future. . . ."

Burress never accepted JLG's September 1977 offer of a new distributorship contract. The complaint does not allege that any purchases were ever undertaken pursuant to that proposal. Throughout the period of time concerned in paragraph 11 of the complaint, Burress apparently was still purchasing lift units pursuant to the terms of the old contract of March 22, 1976. Ultimately, the old distributorship agreement expired, whereupon contractual relations between Burress and JLG ceased.

Defendant JLG's dismissal motion rests on the language of the Robinson-Patman Act making it unlawful "for any person . . . to discriminate in price between different purchasers . . .." 15 U.S.C. § 13(a). The defendant argues that since Burress never signed the proposed new contract of September 1977, Burress cannot be a "purchaser" as required by the Robinson-Patman Act. Defendant thus urges that the allegations of paragraph 11, depending, as they do, merely on the offer of a new distributorship agreement, must fail.

Defendant relies on cases such as Shaw's, Inc. v. Wilson-Jones Co., 105 F.2d 331 (3d Cir. 1939) which disallow recovery where the plaintiff is only a potential purchaser and not an actual purchaser. In Shaw's the court was interpreting the portion of the Robinson-Patman Act upon which this case turns. The court said that

 
The discrimination in price referred to must be practiced "between different purchasers". Therefore at least two purchases must have taken place. The term purchaser means simply one who purchases, a buyer, a vendee. It does not mean one who seeks to purchase, a person who goes into the market-place for the purpose of purchasing. In other words, it does not mean a prospective purchaser, or one who wishes to purchase . . ..

105 F.2d at 333. In response to the argument of the plaintiff in Shaw's that it had been a customer and therefore had "purchaser" status under the Act, the Shaw's court stated: "Past purchases or conversations in respect to possible future purchases are insufficient." Id. Courts often have followed Shaw's in declining to equate offers to discriminate with actual price discrimination.[2]

Plaintiff Burress, on the other hand, maintains that the protection afforded by the Robinson-Patman Act is broader. Plaintiff concedes that there have been no purchases undertaken pursuant to the September 1977 proposed contract. Plaintiff's theory of recovery rests on the language of the Fifth Circuit in American Can Co. v. Bruce's Juices, Inc., 187 F.2d 919 (5th Cir.), op. mod. and pet. for reh'g denied, 190 F.2d 73, app. dismissed, 342 U.S. 875, 72 S. Ct. 165, 96 L. Ed. 657 (1951): "[P]laintiff was not bound to purchase the 3.12 Iscan upon [discriminatory] terms in order to attain the status of a competing purchaser under the Act, as its failure to do so was directly attributable to defendant's own discriminatory practice." 187 F.2d at 924. Thus, Burress contends that Bruce's Juices permits a Robinson-Patman plaintiff "who is currently purchasing goods from the defendant and competing with other purchasers of goods from the defendant at the time of the price discrimination, to recover when the failure of plaintiff to purchase at the discriminatory price is directly attributable to the actions of the defendant...."

Before analyzing the applicability of Bruce's Juices to the plaintiff's situation in this case, it may be useful to recall that the Robinson-Patman Act forbids discrimination in price only as it occurs between "different *18 purchasers."[3] The question for decision, then, is simply whether Burress can assert status as a "purchaser" solely on the basis of the September 1977 proposal.

It cannot meaningfully be said that a "purchase" has occurred until buyer and seller have completed their negotiations and have in some way expressed their mutual assent that legally enforceable expectations and commitments arise. In short, there must be a contract. It is sufficient that the contract be merely executory; actual delivery and payment are not essential to a "purchase" for Robinson-Patman purposes. Aluminum Co. of America v. Tandet, 235 F. Supp. 111 (D.Conn.1964). But legally enforceable commitments must be in existence.

The exact nature of the contractual relations between the plaintiff and the defendant in Bruce's Juices is not spelled out in the Fifth Circuit's 1951 opinion with extreme precision. It is far from clear that the opinion, in light of the facts of the case, permits recovery in the absence of purchases. It is apparent, though, as was observed in Tandet, 235 F. Supp. at 114, that Bruce's Juices cannot be read "to authorize any prospective buyer or offeree in the open market to be a beneficiary under the Act."

In Bruce's Juices, the plaintiff discovered that the defendant, a can manufacturer, had been selling a particular type of can to plaintiff's competitors at a secret discount.[4] This can was known as the "3.12 Iscan." When plaintiff learned of the secret discount, it sought for itself the same low price on the 3.12 Iscan or, in lieu of that, an equivalent low price on a similar can. The defendant refused to allow the plaintiff the same low price on 3.12 Iscans as the plaintiff's competitors were getting. This, the court said, "made it financially impossible for plaintiff to purchase that particular Iscan . . .." 187 F.2d at 923 (emphasis added). It does not appear from the Fifth Circuit's opinion that the plaintiff ceased purchasing cans from the defendant when the defendant refused to allow the plaintiff a lower price.[5] On the contrary, it would appear that the plaintiff was purchasing some other, similar size cans at the same time as competitors were purchasing at a discount the 3.12 Iscan.[6] This seems clear from the court's statement, in summing up the nature of the injury to the plaintiff in Bruce's Juices, that "the discriminatory higher price paid by plaintiff for an Iscan of like grade and quality diminished its profits and helped destroy its ability to withstand competition." 187 F.2d at 922 (emphasis added).

Thus, liability in Bruce's Juices was not premised solely on the defendant's refusal to sell 3.12 Iscans to the plaintiff at the price the plaintiff desired. The court simply recognized that the failure of the parties to consummate a sale of 3.12 Iscans in particular did not preclude recovery with respect to the discriminatory pricing in sales that did occur. And, as this court reads Bruce's Juices, liability was based on sales that did occur.

In sum, Bruce's Juices does not, in this court's view, stand for the proposition *19 that a plaintiff in Burress' position may recover under the Robinson-Patman Act without having contracted to purchase goods at a discriminatory price. The court has found no case that would go so far as to allow recovery for what the plaintiff here terms a "continuing discriminatory offer to sell." The threshold of Robinson-Patman liability is not reached until there have been two purchasesbinding commitments to buy and sellat discriminatory prices. Absent such binding commitments, the plaintiff suffers no injury for which the Robinson-Patman Act affords a remedy.

Paragraph 11 of the complaint in this case seeks to predicate Robinson-Patman Act liability upon the allegedly discriminatory offer of September 1977. That proposed new contract was never signed; it obviously created no legal commitments whatever; certainly no purchases transpired under it. In light of all the foregoing, this court is convinced beyond doubt that the plaintiff could prove no set of facts upon the allegations of paragraph 11 of the complaint which would entitle it to relief. Conley v. Gibson, 355 U.S. 41, 45-46, 78 S. Ct. 99, 101, 102, 2 L. Ed. 2d 80 (1957). Accordingly, the motion of the defendant for judgment on this portion of pleadings will be granted and the plaintiff will not, in further proceedings in this cause, be permitted to predicate any alleged violation of the Robinson-Patman Act upon the proposed new contract of September 1977.[7]

NOTES

[1] Defendant moves to dismiss the complaint to the extent that it alleges discrimination merely in the "terms" of a contract, not a discrimination in price. Paragraph 10 of the complaint is not objectionable on that ground since plaintiff does allege there that purchases of the units were made by plaintiff and other purchasers and that defendant's providing the units to plaintiff under "different terms" than it provides them to other purchasers "had the effect of discriminating in price...." This adequately states a claim of price discrimination. See Corn Products Co. v. Federal Trade Commission, 324 U.S. 726, 740, 65 S. Ct. 961, 968, 89 L. Ed. 1320 (1945).

[2] E. g., Klein v. Lionel Corp., 237 F.2d 13, 15 (3d Cir. 1956); Naifeh v. Ronson Metal Works, 218 F.2d 202, 206 & n. 6 (10th Cir. 1954); Chicago Seating Co. v. S. Karpen & Bros., 177 F.2d 863, 867 (7th Cir. 1949). See Bay City-Abraham Bros. Inc. v. Estee Lauder, Inc., 375 F. Supp. 1206, 1218 (S.D.N.Y.1974).

[3] 15 U.S.C. § 13(a). Bruce's Juices, of course, does not relax the "purchasers" requirement. In allowing recovery, the court in Bruce's Juices found the statutory mandate that the plaintiff be a "purchaser" satisfied because the plaintiff there had purchased other products which were of "like grade and quality" as the "3.12 Iscan" which plaintiff declined to purchase. 187 F.2d at 924.

[4] The facts of Bruce's Juices are reported in 187 F.2d at 920-23 and in the district court's opinion in Bruce's Juices v. American Can Co., 87 F. Supp. 985, 987-91 (S.D.Fla.1949).

[5] Nor does it so appear from any of the numerous other published opinions in the extended litigation between the Bruce's Juices firm and the American Can Company. See Bruce's Juices v. American Can Co., 330 U.S. 743, 67 S. Ct. 1015, 91 L. Ed. 1219 (1947) aff'g 155 Fla. 877, 22 So. 2d 461 (1946); Bruce's Juices v. American Can Co., 87 F. Supp. 985 (S.D.Fla. 1949).

[6] The district court's opinion indicates that Iscans were available in four slightly different sizes. All Iscans were the same diameter, 2.02 inches, and they varied in height as follows: 3.00 inches, 3.09 inches, 3.12 inches, and 3.14 inches. 87 F. Supp. at 990.

[7] This ruling, of course, leaves plaintiff's other antitrust and contract claims unscathed.