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EMIL J. LAUTER CO., INC. v. BRUNSWICK CORP.

United States District Court, Northern District of Illinois, E.D


February 26, 1982

EMIL J. LAUTER CO., INC., ETC., PLAINTIFF,
v.
BRUNSWICK CORPORATION, DEFENDANT.

The opinion of the court was delivered by: Shadur, District Judge.

MEMORANDUM OPINION AND ORDER

Emil J. Lauter Co., Inc. ("Lauter") sues Brunswick Corporation ("Brunswick") charging price discrimination in violation of Section 2(a) of the Robinson-Patman Act (the "Act"), 15 U.S.C. § 13(a). Brunswick has moved to dismiss under Fed.R.Civ.P. ("Rule") 12(b)(6). For the reasons stated in this memorandum opinion and order Brunswick's motion is granted.

Facts*fn1

Lauter's Skokie, Illinois store sells billiard tables and pinball machines at retail. On May 28, 1974 Lauter entered into a non-exclusive dealership agreement (the "Agreement") to sell Brunswick billiard tables. Brunswick later established its own competitive retail outlets*fn2 for billiard tables and pinball machines. Brunswick supplied its own retail outlets with merchandise at prices lower than those charged Lauter, in an attempt to drive Lauter out of business.*fn3 Lauter sustained injury to his business and seeks treble damages because of Brunswick's conduct.*fn4

Robinson-Patman Act Liability

Section 2(a) provides:

  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 such
  commodities are sold for use, consumption, or
  resale. . . .

At least two sales by a defendant are essential to a cause of action under the Act: one to plaintiff and one to plaintiff's competitor. Lupia v. Stella D'Oro Biscuit Co., 586 F.2d 1163, 1170-71 (7th Cir. 1978).

It appears that Brunswick's "outlets" are not separate corporate entities.*fn5 If so the case is over. By definition Brunswick could not sell to itself, whether or not (for example) it may have maintained divisional accounting or comparable records for its own convenience. No second "purchaser" would exist — fatal to a Section 2(a) claim.*fn6 Diehl & Sons, Inc. v. International Harvester Co., 426 F. Supp. 110, 123 (E.D.N Y 1976). As our own Court of Appeals put it in Lupia, 586 F.2d at 1171:

  In addition, Judge Flaum thought it inherently
  impossible for illegal competition to exist where
  a manufacturer competes directly with his own
  distributor. That is his privilege, according to
  Chicago Sugar Co. v. American Sugar Refining Co.,
  [176 F.2d 1, 10 (7th Cir. 1949)].

But because Lauter may have been guilty of faulty factual pleading as well as faulty legal analysis (in which case the factual flaw might be deemed cured by repleading), this opinion will examine the alternative — that Brunswick's "outlets" are operated by corporate subsidiaries. Lauter could fare no better under that hypothesis, under such cases as Security Tire & Rubber Co. v. Gates Rubber Co., 598 F.2d 962, 964-67 (5th Cir.), cert. denied, 444 U.S. 942, 100 S.Ct. 298, 62 L.Ed.2d 309 (1979); see, P. Areeda, Antitrust Analysis ¶ 701(c), at 1056 and n. 18.

True enough, some courts have (incorrectly in this Court's view) analyzed like problems in a way that could permit form to prevail over economic substance, finding possible a "sale" between parent and subsidiary for Robinson-Patman purposes. But that notion, even where recognized, has been strictly limited to the subsidiary "operated independently of dominion and control of [the parent]. . . ." Parrish v. Cox, 586 F.2d 9, 12 (6th Cir. 1978).*fn7 Here Complaint ¶ 6 says Brunswick "operate[s]" the outlets, negating any such independence.

Conclusion

Whatever view of the relationships and the legal alternatives is adopted, Lauter has no viable Section 2(a) claim against Brunswick. Accordingly Brunswick's Rule 12(b)(6) motion is granted and the Complaint is dismissed.


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