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Packaging Supplies, Inc. v. Harley-Davidson

March 30, 2009

PACKAGING SUPPLIES, INC., PLAINTIFF,
v.
HARLEY-DAVIDSON, INC., DEFENDANT.



The opinion of the court was delivered by: Judge Robert M. Dow, Jr.

MEMORANDUM OPINION AND ORDER

This case arises out of a three-count complaint [1] filed by Plaintiff, Packaging Supplies, Inc. ("PSI"), against Defendant, Harley-Davidson, Inc. ("Harley-Davidson"), for violations of state tort law and federal antitrust law. Before the Court is Defendant' s motion to dismiss Plaintiffs'complaint [9] for failure to state a claim, pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure. For the reasons stated below, Defendant' s motion to dismiss is denied.

I. Background*fn1

PSI' s business is plastic merchandise bags. These bags are not sold in stores; rather they are used by consumers for carrying away their purchases after transactions with PSI' s clients.

The bags are custom printed, and since 1964 PSI has been selling them to "retailers, manufacturers and franchise operators" throughout the United States. Compl. ¶ 6. Beginning around 2002, numerous Harley-Davidson motorcycle dealerships (125 out of 679) were among PSI' s clients. These dealerships are independently owned and licensed, and the bags that PSI made were customized for each dealer-client (a process which, PSI states, could take months). Id. at ¶¶ 7, 10-12.

PSI alleges that Harley-Davidson sent an "edict" to its dealers directing them not to purchase their bags from PSI and instead to purchase their bags only from Harley-Davidson's merchandising division ("the Notice"). Id. at ¶ 1. Plaintiff does not allege when the Notice was distributed, but states that it became aware of the Notice in or around June 2007. Id. at ¶ 13. A copy of the Notice was affixed to the complaint and therefore "is a part of the pleading for all purposes." Fed. R. Civ. P. 10(c). Because of its centrality to the case, the pertinent text of the Notice --styled "Notice Regarding PSI Merchandise Bags and That' s a Wrap Headwear" -- is set out below:

It has come to our attention recently that numerous dealers have been ordering dealer-customized merchandise bags from Packaging Supplies, Inc. (PSI), in Scottsdale, AZ. Dealers are reminded that all merchandise bags bearing Harley-Davidson's name and/or logo must be obtained through General Merchandise. PSI has received a cease and desist notice requiring them to stop providing these bags.

We have also learned that many dealers are ordering dealer-customized head wraps from That' s a Wrap in Madison, WI. As dealers are aware, goods of any nature bearing Harley-Davidson' s trademarks, including as they are incorporated in dealer business names and/or logos, may be obtained only from sources approved in advance by Harley-Davidson. This is true whether the goods are sold or given away as a promotion. That' s a wrap has also received a cease and desist letter advising them that dealers do not have the right to authorize the application of our trademarks to That' s A Wrap' s products.

Harley-Davidson invests considerable resources in exercising quality control measures imposed on it under trademark law. If we fail to exercise these controls, we run the risk of losing our trademark rights. Dealers are asked to respect those rights and assist Harley-Davidson in protecting its most valuable assets for our mutual benefit.

Compl., Ex. A (emphasis in original).

PSI alleges that the letter mandates that the "dealers' s (sic) merchandise bags 'must be obtained through [Harley-Davidson.]'" Id. at ¶ 14. PSI further alleges that, contrary to the assertion in the Notice, PSI never received a cease and desist notice and that Harley-Davidson had not had contact with PSI for several years. After the Notice was circulated, PSI began losing substantial sums of money, experiencing a more than $100,000 decline in revenues from 2006 to 2007. The dealers, many of whom liked PSI bags for their low cost and high quality, "feared repercussions from [Harley-Davidson] if they continued to do business with PSI." Id. at ¶¶ 15-17.

PSI alleges that "as a direct and proximate result" of the "improper and inaccurate" Notice, PSI has "suffered substantial financial damage."Id. at 18. In addition, Harley-Davidson contacted certain dealers to ask them if they bought from PSI. Harley-Davidson informed those dealers "that PSI was not going to take any more orders, or will not be shipping any more current orders to [Harley-Davidson] dealers." Id. at ¶ 27. Those statements were false, according to PSI, and intended to interfere with the relationship between PSI and its dealer-customers.

PSI' s complaint comprises three counts. Counts I and II are, respectively, state law claims for (i) tortious interference with business relationships and for (ii) tortious interference with prospective business advantage. Count III alleges an illegal tying arrangement ...


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