Mowing Equipment Maker's Pricing Practices Not Discriminatory

This posting was written by Darius Sturmer, Editor of CCH Trade Regulation Reporter.

A mowing equipment manufacturer and its exclusive wholesale distributor in the Louisville, Kentucky area did not violate the Robinson-Patman Act through an alleged discriminatory pricing scheme, the U.S. Court of Appeals for the Sixth Circuit in Cincinnati has ruled.

A federal district court's dismissal of a dealer's secondary-line price discrimination claim against the manufacturer and its distributor with prejudice (2010-1 Trade Cases ¶76,894) was proper.

The trial court initially declined to dismiss the price discrimination claim based on the belief that the dealer was alleging that the manufacturer actually set or controlled the distributor's prices. The court subsequently vacated that decision, however, after it determined that such a belief was incorrect. Based upon this determination, there were insufficient factual allegations to support the dealer's claim, the lower court held. The appellate court agreed.

Indirect Purchaser Doctrine

The complaining dealer did not plausibly allege the existence of a dummy or strawman arrangement that could satisfy the Act's different purchasers requirement using the "indirect purchaser" doctrine. That doctrine prevented a manufacturer from insulating itself from Robinson-Patman Act liability by using a dummy wholesaler to make sales at terms actually controlled by the manufacturer.

Following the U.S. Supreme Court's tightening of the pleadings standards in Bell Atlantic Corp. v. Twombly (2007-1 Trade Cases ¶75,709) and Ashcroft v. Iqbal(2009-2 Trade Cases ¶76,785), a plaintiff could no longer use the discovery process to obtain the pricing information it needed to make its case after filing suit, the appellate court said.

The dealer's allegation that the manufacturer monitored the distributor's prices was insufficient. Simply providing advertising and warranty programs, or giving suggested retail prices, could not be enough to satisfy the indirect purchaser doctrine.

The June 21 decision in New Albany Tractor, Inc. v. Louisville Tractor, Inc., No. 10-5100, will be reported at 2011-1 Trade Cases ¶77,498.