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January 2, 2001


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


Johnson Controls, Inc. and Johnson Controls Battery Group, Inc. (collectively "Johnson Controls", treated hereafter as a singular noun) have asserted a number of claims against Exide Corporation ("Exide") and three of its former officers: Arthur Hawkins ("Hawkins"), Alan Gauthier ("Gauthier") and Douglas Pearson ("Pearson"). In brief, Johnson Controls charges defendants with having committed acts of commercial bribery in violation of (1) one provision (15 U.S.C. § 13(c)) of the Robinson — Patman Act ("Act"),*fn1 (2) the Racketeer Influenced and Corrupt Organizations Act ("RICO," 18 U.S.C. § 1962(c)) and (3) state common law.

Exide, which is targeted only under the Act (Count I) and the state Jaw prohibition against tortious interference with prospective business opportunity (Count III),*fn2 has filed a Fed.R.Civ.P. ("Rule") 12(b)(6) motion for its dismissal from this action. For the reasons set out in this opinion, Exide's motion to dismiss is granted in part and denied in part.

Rule 12(b)(6) Standard

For purposes of the current motion this Court accepts the Complaint's well-pleaded factual allegations as true, while also drawing all reasonable inferences in Johnson Controls' favor (Sherwin Manor Nursing Ctr., Inc. v. McAuliffe, 37 F.3d 1216, 1219 (7th Cir. 1994)). And under Rule 12(b)(6) no claim will be dismissed unless "it is clear that no relief could be granted under any set of facts that could be proved consistent with the allegations" (Hishon v. King & Spalding, 467 U.S. 69, 73, 104 S.Ct. 2229, 81 L.Ed.2d 59 (1984), quoting Conley v. Gibson, 355 U.S. 41, 45-46, 78 S.Ct. 99, 2 L.Ed.2d 80 (1957)).


Johnson Controls is a manufacturer and supplier of automotive and specialty batteries (¶ 13). Exide is one of its competitors (¶ 86). This action arises out of claims that several of Exide's agents bribed Gary Marks ("Marks"), an agent of Sears, Roebuck & Co. ("Sears"), to procure a battery contract that Johnson Controls bid for but lost.

As of late 1993 Johnson Controls had a long-standing business arrangement as Sears' supplier of automotive and specialty batteries (¶ 17). In the years immediately preceding 1994 Johnson Controls had supplied 95% (pursuant to an October 1, 1988 contract) and then 100% (under a July 13, 1989 contract, the "1989 Agreement") of Sears' requirements for automotive batteries (¶¶ 21, 22). Then on September 7, 1993 Sears wrote Johnson Controls that it was terminating the 1989 Agreement effective September 30, 1994, as that agreement permitted (¶¶ 22, 23). Sears said in its letter that it wanted to renegotiate the terms of its battery supply contract but that it anticipated that it would "continue to purchase a significant quantity of batteries from Johnson Controls" (¶ 24).

In December 1993 Sears started a Strategic Sourcing Initiative, with the assistance of an outside consultant, to analyze its purchases and reduce expenditures "while increasing quality and forging closer and more efficient links with important suppliers and vendors" (¶ 25). Marks, who had assumed the title of "battery buyer" for Sears about May 1993 (¶ 26), was actively involved in the Strategic Sourcing Initiative and in selecting suppliers of automotive batteries for. Sears for the period to begin October 1, 1994 (¶ 27). But Sears, in its pending litigation with Exide in the Circuit Court of Cook County, Case No. 99 L 10458, has expressly asserted in its Counterclaim ¶ 11:*fn4

As Battery Buyer, Marks lacked the authority to select battery vendors.

On February 10, 1994 Marks sent Johnson Controls a request-for-quotation package asking for its bids on a number of supply options for delivery starting in October 1994 (¶ 28). That package listed Marks as Sears' contact person for the process of bidding on Sears' battery supply contract (¶ 29). On February 28 Johnson Controls submitted a bid package seeking Sears' battery supply contract (¶ 30).

Two other companies bid for Sears' battery supply contract: Exide and AC Delco ("Delco"), both of whom submitted their bids in February or March 1994 (¶ 33). Sears continued negotiations with all three bidders — Johnson Controls, Exide and Delco — into April 1994 (¶ 34). During those negotiations Marks criticized the quality of Johnson Controls' product and marketing plans and advocated Exide's selection to Sears' selection committee (¶ 35). Then on April 21 Sears announced its decision to award approximately 70% of its battery business to Exide and the remaining 30% to Delco (¶ 36), effectively terminating the long-standing Sears — Johnson Controls relationship (¶ 37). Sears' announcement expressly stated that its battery sourcing decision did not reflect "any dissatisfaction" with the quality of Johnson Controls' products (¶ 38).

About the same time that Johnson Controls lost its bid for the Sears battery supply contract, it also lost business from Sears' Canadian affiliate ("Sears Canada"). Before 1994 Johnson Controls and Sears Canada had developed an excellent business relationship centered around Johnson Controls' supply of automotive and specialty batteries (¶ 39). Sears Canada had awarded Johnson Controls its annual Partners in Progress Awards in a number of those years, including 1993 (¶ 40).

During June 1994 Johnson Controls engaged in separate negotiations with representatives of Sears Canada regarding its sale of batteries (¶ 41). But it encountered strong resistance from Marks to its continued dealings with Sears Canada, and Marks said he wanted to award the Sears Canada business to Exide (¶ 42). On July 5 Sears Canada informed Johnson Controls that effective in October 1994 Exide would supply all of Sears Canada's auto-. motive battery requirements (¶ 43).

Johnson Controls contends that Exide obtained Sears' business through illegal means. For the purposes of Exide's bid for Sears' supply contracts, Hawkins asked Exide employee Joseph Calio ("Calio") to become involved in the negotiations with Sears "in early 1994" (¶ 44)*fn5 During those negotiations Calio repeatedly met with Marks at Sears' offices in Hoffman Estates, Illinois (¶ 46). And over the course of those visits Marks told Calio during their private conversations that Marks wanted Exide to pay him for influencing Sears to award the business to Exide (¶ 47). Calio also learned during the course of the negotiations that Hawkins had led Marks to believe that he would be paid $20,000 per month if Exide obtained Sears' battery supply contract (¶ 48).

After Calio expressed reservations about continuing to deliver the bribes to Marks (¶ 63), Gauthier told him that future payments to Marks would be made by wire transfer to DG Consulting (¶ 65). Exide made at least six payments of $10,000 each to DG Consulting between September 6, 1995 and January 31, 1996 (¶ 66). Exide's promises to pay and its payments of bribes to Marks were intended to increase the likelihood that Exide would obtain and retain Sears' business (¶ 68).*fn6 Those payments to Marks ceased when he was transferred to another position and was no longer Sears' battery buyer (69).

On March 2, 1999 Sears and Exide announced they had decided to end their business relationship (¶ 71). On September 7 of that year Exide sued Sears, seeking over $15 million in damages for the asserted breach of its battery supply contracts (¶ 72). On November 12 Sears filed a counterclaim alleging that Exide had paid $20,000 in bribes to Marks and had induced a breach of Marks' fiduciary duty to Sears (¶ 73). Just a week later the Wall Street Journal and newswire services published articles that discussed the Exide — Sears litigation, stating in part that Sears "accused Exide of making $20,000 in payments to the retailer's battery buyer over a 2 1/2 year period and receiving information about a contract" (¶ 74).

Johnson Controls first learned of Exide's bribes to Marks at the time of those publications — November 19, 1999 (¶ 75). Then on December 17, 1999 Exide filed an answer to Sears' counterclaim, revealing that it had made at least six additional payments of $10,000 each to Marks (¶ 76). Johnson Controls ...

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