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Felder's Collision Parts, Inc. v. General Motors Co.

United States District Court, M.D. Louisiana

April 17, 2013

FELDER'S COLLISION PARTS, INC.
v.
GENERAL MOTORS COMPANY ET AL

Decided April 16, 2013

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For Felder's Collision Parts, Inc., Plaintiff: James M. Garner, LEAD ATTORNEY, Kevin M. McGlone, Peter L. Hilbert, Jr., Ryan D. Adams, Sher Garner Cahill Richter Klein & Hilbert, L.L.C., New Orelans, LA; Darnell Bludworth, Sher, Garner, Cahill, Richter, Klein, McAlister & Hilbert, New Orleans, LA; Gladstone N. Jones, III, Jones, Swanson, Huddell & Garrison, LLC - N.O., New Orleans, LA; Harvey S. Bartlett, III, Jones, Swanson, Huddell & Garrison, New Orleans, LA; Lynn E. Swanson, Jones, Swanson, Huddell & Garrison, LLC, New Orleans, LA.

For General Motors Company, Defendant: David George Radlauer, Mark A. Cunningham, Thomas A. Casey, Jr., Jones Walker LLP, New Orleans, LA; Tarak Anada, Jones, Walker-NO, New Orleans,, LA.

For All Star Advertising Agency Inc., All Star Chevrolet North, L.L.C., All Star Chevrolet, Inc., Defendants: Michael W. McKay, LEAD ATTORNEY, Stone, Pigman, Walther, Wittmann, LLC - B.R., Baton Rouge, LA.

OPINION

JAMES J. BRADY, DISTRICT JUDGE.

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RULING ON DEFENDANTS' MOTION TO DISMISS

This matter is before the Court on a Motion to Dismiss (Doc. 22) pursuant to Federal Rule of Civil Procedure 12(b)(6), filed by Defendants General Motors LLC [1] (" GM" ), All Star Advertising Agency, Inc., All Star Chevrolet North, L.L.C., and All Star Chevrolet, Inc. (the All Star Defendants are referred to as " All Star" ). Plaintiff, Felder's Collision Parts, Inc. (" Felder's" ), has filed an opposition (Doc. 25), to which Defendants have filed a reply (Doc. 28). In opposition, Felder's has requested leave to amend any allegations that this Court deems insufficient. Oral argument is not necessary. The Court's jurisdiction exists pursuant to 28 U.S.C. § 1331. For the reasons herein, the Defendants' Motion to Dismiss (Doc. 22) is DENIED, and Plaintiff's request for leave to amend (Doc. 25 at 22-23) is GRANTED.

I.

Felder's brought this action pursuant to the Robinson-Patman Act (" RPA" ), 15 U.S.C. § 13, the Sherman Act, 15 U.S.C. § 2, the Louisiana Unfair Trade Practices and Consumer Protection Act (" LUTPA" ), La. Rev. Stat. § 51:1401, et seq. , and several other Louisiana revised statutes, La. R.S. § § 51:122, 123, 124, 137, and 422 (Doc. 1). Additionally, Felder's contends that GM, All Star, and John Doe Defendants 1-25 (" Doe Defendants" ) should be held jointly and severally liable for conspiring to aforementioned violations under La. Civ. Code art. 2324. Defendants' Motion to Dismiss is brought on the following grounds: (1) the claims are insufficiently pled, (2) the RPA claim must fail because

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Felder's does not allege price discrimination, (3) Felder's fails to state a predatory pricing claim because the allegations inadequately address relevant market(s), market power, and barriers to entry, (4) dismissal is appropriate because Felder's cannot establish below-cost pricing, (5) Felder's lacks antitrust standing, (6) the Louisiana antitrust claims must fall because the federal claims are deficient, (7) Felder's' other state law claims fail as a matter of law, and (8) Felder's impermissibly refers to the three All Star entities as " All Star."

The following facts are from the Complaint (Doc. 1) and are accepted as true for the purposes of this motion. See Bass v. Stryker Corp. , 669 F.3d 501, 507 (5th Cir. 2012). There are two types of automobile parts: original equipment manufacturer parts (" OEM parts" ), which are produced by the manufacturer, and aftermarket parts, which are produced by other entities. All Star and the Doe Defendants sell OEM parts, specifically GM-compatible parts, to collision centers and body shops throughout southern Louisiana and southern Mississippi. Felder's operates in the same geographic area and at the same level of the distribution chain as All Star and Doe Defendants, but Felder's sells aftermarket parts. Aftermarket collision parts consist of approximately 20% of the automobile replacement party market and historically, have been sold for lower prices than their OEM counterparts.

In 2009, GM established a price incentive program called the " Bump the Competition" program, which offers " highly competitive pricing" on GM parts (Doc. 1, Ex. 1). As part of the program, GM created a " GM Collision Conquest Calculator," which Felder's alleges is a facilitating device for Defendants' conspiracy to resell OEM parts for a price below the average variable cost (" AVC" ) [2] paid by dealers to GM for the parts. According to Felder's, Defendants' intention is to undercut aftermarket dealer prices in order to drive the aftermarket competition out of business.

Under the program, distributors, like All Star, may sell OEM parts at a " bottom line price," which is 33% lower than the price for the aftermarket equivalent, and then apply to GM for a rebate. The rebate enables dealers to collect the difference between the sale price and the cost paid to GM, plus an additional profit. Additionally, GM allegedly offers cash rebate cards to sales representatives to induce sales under the program's terms. The pricing program is available for 4,400 parts. According to Felder's, the pricing program has only been instituted with respect to OEM parts with a comparable aftermarket alternative. GM does not incentivize OEM dealers to sell parts without an aftermarket alternative at prices below cost. Ultimately, Felder's alleges that Defendants conduct is an unlawful attempt to obtain monopoly power.

Felder's provides several examples [3] to illustrate its assertion that Defendants are conspiring to obtain a monopoly by engaging in predatory pricing. For instance, GM offers to sell one particular OEM part for $135.01, which is normally listed by the dealer for $228.83. The comparable aftermarket part is listed for $179.00. Under the pricing program, an OEM dealer can sell the part for a " bottom line price," which is the aftermarket price less 33%.

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Here, the bottom line price is $119.93. After selling the part for $119.93, the dealer is entitled to a rebate from GM for the difference between the price paid for the part, $135.01, and the price for which the dealer sold the part, $119.93, plus an additional 14% profit, which is $18.90.

Felder's alleges that, in recent years, the pricing program has significantly impacted the sale of aftermarket parts throughout southern Louisiana and southern Mississippi. Felder's asserts that four of its competitors have already gone bankrupt due to the Defendants' conduct. Felder's also alleges that it has suffered a steady profit decline during the program's existence. In 2008, the last year before this program was implemented, Felder's had a total income in excess of $3 million. By 2011, Felder's' income had decreased by more than $1 million.

Felder's contends that All Star and Doe Defendants have a " reasonable prospect and/or dangerous probability of recouping any losses resulting from the sale of collision parts below AVC." (Doc. 1 at 9). Felder's contends that once the competition has been " bumped," Defendants will reap monopoly profits by ceasing to offer reduced prices on parts that currently have aftermarket alternatives. Defendants will be able to maintain these supracompetitive prices, according to Felder's, because " high and difficult" barriers to entry in the automobile parts industry will prevent new entrants from effectively competing with Defendants (Doc. 1 at 10).

II.

Federal Rule of Civil Procedure 12(b)(6) provides 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 reviewing the complaint, the court must accept all well-pleaded facts in the complaint as true. C.C. Port, Ltd. v. Davis-Penn Mortg. Co. , 61 F.3d 288, 289 (5th Cir. 1995). In order to survive a motion to dismiss, the complaint must plead " enough facts to state a claim to relief that is plausible on its face." Bell Atlantic Corp. v. Twombly , 550 U.S. 544, 570, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007).

III.

FEDERAL ANTITRUST CLAIMS

Felder's has alleged that Defendants engaged in predatory pricing, thereby violating both the RPA and § 2 of the Sherman Act. Since the standards applicable under these acts are distinct, these claims will be addressed in turn.

To establish a claim under the RPA, a plaintiff must show: (1) sales made in interstate commerce; (2) the commodities sold were of like grade and quality; (3) the defendant-seller discriminated in price between buyers; and (4) that the price discrimination had a prohibited effect on competition. Infusion Res., Inc. v. Minimed, Inc. , 351 F.3d 688, 692 (5th Cir. 2003). The complained-of injury [4] must flow from a defendant's acts of price discrimination, which is " merely a price difference." Water Craft Management, L.L.C. v. Mercury Marine , 361 F.Supp.2d 518, 526 (M.D. La. 2004) (citing Texaco Inc. v. Hasbrouck , 496 U.S. 543, 559, 110 S.Ct. 2535, 110 L.Ed.2d 492 (1990)). Price discrimination is " defined as charging different buyers different prices for the same items." Id.

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Under § 2 of the Sherman Act, three broad categories of conduct are actionable: monopolization, attempted monopolization, and conspiracy to monopolize. The measure of proof for each is distinct. See generally Vaughn Medical Equipment Repair Services, L.L.C., v. Jordan Reeses Supply Co. , 2010 WL 3488244, at *9-10 (E.D. La. Aug. 26, 2010). To state a claim for monopolization , the plaintiff must allege that the defendant: (1) possesses monopoly power in the relevant market, and (2) willfully acquired or maintained that power. Eastman Kodak Co. v. Image Tech Servs., Inc. , 504 U.S. 451, 481, 112 S.Ct. 2072, 119 L.Ed.2d 265 (1992). To state a claim for attempted monopolization , the plaintiff must allege that " (1) the defendant has engaged in predatory or anticompetitive conduct with (2) a specific intent to monopolize and (3) a dangerous probability of achieving monopoly power" in the relevant market. Spectrum Sports, Inc. v. McQuillan , 506 U.S. 447, 456, 113 S.Ct. 884, 122 L.Ed.2d 247 (1993). Finally, to state a claim for conspiracy to monopolize , the plaintiff must allege: (1) specific intent to monopolize, (2) the existence of a combination or conspiracy to monopolize, (3) an overt act in furtherance of the combination or conspiracy, and (4) an effect upon a substantial portion of interstate commerce. Stewart Glass & Mirror, Inc. v. U.S. Auto Glass Disc. Centers, Inc. , 200 F.3d 307, 316 (5th Cir. 2000).

At the outset, the Court addresses two areas of ambiguity in the pleadings. First, the Complaint is unclear about whether Defendants have engaged in actual monopolization, an attempt to monopolize, or a conspiracy to monopolize. [5] Predatory pricing can serve as a basis for either actual monopolization or an attempt to monopolize. See, e.g., Stearns Airport Equipment Co., Inc. v. FMC Corp. , 170 F.3d 518, 528 (5th Cir. 1999) (discussing plaintiff's actual monopolization claim based on predatory pricing); Taylor Pub. Co. v. Jostens, Inc. , 216 F.3d 465, 477-79 (5th Cir. 2000) (analyzing predatory pricing under first of three elements relative to plaintiffs claim for attempted monopolization). Notably, Defendants cite the elements for attempted monopolization, tailoring the analysis therein accordingly. [6] Confusing matters, Felder's' opposition cites to the same elements, but indicates that the elements relate to actual monopolization. [7] Despite the fact that Felder's' opposition refers to the attempted monopolization elements as the elements for actual monopolization, the analysis below treats Felder's' Sherman Act § 2 claim as an attempted monopolization claim.

Second, Felder's' arguments regarding the federal antitrust claims ignore key distinctions between the predatory pricing claims cognizable under the RPA and § 2 of the Sherman Act. It is true that predatory pricing is actionable under either statute. Indeed, " primary-line injury under the [RPA] is of the same general character as the injury inflicted by predatory pricing schemes actionable under § 2

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of the Sherman Act." Brooke Group Ltd. v. Brown & Williamson Tobacco Corp. , 509 U.S. 209, 221, 113 S.Ct. 2578, 125 L.Ed.2d 168 (1993) (emphasis added). Nevertheless, there are fundamental distinctions between the claims that are cognizable under either statute, [8] which are outlined below. [9]

A. Robinson-Patman Act

Under the RPA, a plaintiff must show that (1) sales were made in interstate commerce; (2) the commodities sold were of like grade and quality; (3) the defendant(s) engaged in price discrimination; and (4) this discrimination had an anticompetitive effect. Infusion , 351 F.3d at 692. Defendants argue that the Complaint fails to address the first three elements. However, the Complaint does support an inference that sales were made in interstate commerce. All Star is located in Louisiana and the Complaints refers to sales in both Louisiana and Mississippi. Any sale by All Star to a buyer in Mississippi involves interstate commerce.

As for the second element--commodities of like grade and quality--Felder's argues that the direct competition between aftermarket and OEM parts suggests that the goods are reasonably interchangeable and, thus, of like grade and quality. Defendants counter that Felder's' argument is irrelevant to the second element. The Court agrees. The issue is not whether aftermarket parts are comparable to OEM parts. Rather, the question is whether Felder's alleged that Defendants sold goods of like quality to different buyers for different prices. Supra note 4; see also Infusion , 351 F.3d at 692 (asking whether goods sold to disfavored purchaser were comparable to goods sold to others). Since Felder's' allegations do not address this issue, the second element of the RPA claim is insufficiently pled.

As for the third element, price discrimination, Felder's argues that this is shown by establishing (1) below-cost pricing and (2) a reasonable prospect of recoupment (Doc. 25 at 10 (citing Brooke Group )). However, this is legally incorrect. Below-cost pricing and recoupment are prerequisites to recovery for predatory pricing. Brooke Group , 509 U.S. at 223. Price discrimination requires a showing that the defendant charged different buyers different prices for the same item(s). Water Craft , 361 F.Supp.2d at 526. The Complaint does not allege that GM discriminated in price as between All Star and Felder's (or, for that matter, between any two distributors), nor does it allege that that any of the Defendant-dealers charged different buyers different prices for the same item. Thus, Felder's does not allege facts from which a fact finder could plausibly find Defendants engaged in price discrimination. [10] Nevertheless,

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the Court grants Felder's' request to amend ...


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