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House of Brides, Inc. v. Alfred Angelo, Inc.

United States District Court, N.D. Illinois, Eastern Division

December 4, 2014



JOHN J. THARP, Jr., District Judge.

The plaintiffs, House of Brides, Inc., House of Brides World's Largest Online Wedding Store, Inc., HOB Holding Corporation, and HOB I Holding Corporation (collectively, "House of Brides"), filed suit against the defendant, Alfred Angelo, Inc. ("Alfred Angelo" or "AA"), alleging a variety of claims. After four of its claims were dismissed without prejudice for failure to state a claim, House of Brides filed a Second Amended Complaint ("SAC") which attempted to revive the four dismissed claims for antitrust violations and tortious interference with business expectancy and asserted two new claims for another antitrust violation and tortious interference with contract. Alfred Angelo has moved to dismiss the restated claims (Counts IV, VI, VII, and IX), as well as the new claims (Counts V and VIII), pursuant to Rule 12(b)(6).[1] For the reasons that follow, the motion is granted.

I. Background

Alfred Angelo is a corporation that manufactures and distributes wedding dresses, including bridal gowns and bridesmaid dresses.[2] House of Brides sells wedding products, primarily bridal gowns and bridesmaid dresses, both at retail store locations and over the Internet. Since 2002, House of Brides has become a "premier online retailer of wedding products." SAC, ¶ 42. House of Brides was among the first such companies to publish retail prices for its products online, allowing consumers to comparison shop. House of Brides also offers weddings products at prices substantially below prices charged by "most, if not all of, [its] competitors." Id. ¶ 44. For more than forty years, House of Brides was an authorized dealer of Alfred Angelo products. Alfred Angelo wedding products became one of the best-selling and most profitable lines sold by House of Brides, and House of Brides became Alfred Angelo's top retailer in the United States. The majority of House of Brides sales transactions for Alfred Angelo products took place online.

As an authorized dealer, House of Brides purchased Alfred Angelo products via special order and purchased a required minimum stock twice a year. On numerous occasions, Alfred Angelo failed to meet a date specified for delivery in the purchase order and the affected customers refused to accept the dress, causing House of Brides to lose the sale. On other occasions, the delay damaged the relationship between House of Brides and its customers. Additionally, Alfred Angelo shipped duplicate, incorrect, or defective orders to House of Brides, forcing House of Brides to pay for dresses that had not been ordered by a customer. According to House of Brides, certain dresses that Alfred Angelo supplied "were not of fair or average quality" and would not pass in the trade under the contract description. Id. ¶ 26.

For many years, Alfred Angelo was "strictly a designer and manufacturer, " but Alfred Angelo now also operates retail stores throughout the United States. Id. ¶ 50. Upon its expansion into operating retail stores, Alfred Angelo became a direct competitor of House of Brides.

On January 1, 2004, Alfred Angelo announced marketing policies, including a mandatory minimum retail pricing policy. Alfred Angelo's mandatory minimum retail pricing policy solicited agreement from retailers not to discount Alfred Angelo products below the policy's minimum prices and threatened to terminate retailers who did not comply. House of Brides was not aware of Alfred Angelo's marketing policies until January 2007. On April 18, 2007, Alfred Angelo sent House of Brides a letter notifying it of the marketing policies that had been introduced in January 2004. At the same time, Alfred Angelo also notified House of Brides that failure to comply with the minimum retail pricing policies would result in termination of its status as an authorized Alfred Angelo dealer. House of Brides rejected Alfred Angelo's mandatory minimum prices, stating that other retailers were selling at discounted prices and that House of Brides needed to remain competitive. The Chief Financial Officer of Alfred Angelo reported receiving complaints from other customers of Alfred Angelo regarding the refusal of House of Brides "to abide by the minimum resale price." Id. ¶ 52. These complaints included threats to stop purchasing from Alfred Angelo unless House of Brides met the agreed minimum prices or until Alfred Angelo stopped supplying products to House of Brides.

Alfred Angelo implemented a new set of marketing policies on November 24, 2010. The 2010 policies set forth both a Manufacturer's Suggested Retail Price ("MSRP") and a Minimum Pricing Policy ("MPP"). The MSRP represented the expected retail price for online sales while the MPP represented the minimum price for products sold at brick-and-mortar stores. House of Brides alleges that Alfred Angelo and its retail dealers deliberately established these policies to "unreasonably restrain prices." Id. ¶ 59. House of Brides also alleges that Alfred Angelo set its MSRP substantially higher than its MPP, thus preventing House of Brides from competing with retail stores. On December 20, 2010, Alfred Angelo solicited House of Brides via email for confirmation of its agreement to Alfred Angelo's new marketing policies. Once again, however, House of Brides informed Alfred Angelo that it would not agree to the policies. At that time, numerous other online distributors of Alfred Angelo products both advertised and sold Alfred Angelo products below the MSRP and MPP.

Alfred Angelo sent House of Brides another email on or about May 4, 2011, containing notification that Alfred Angelo would cease supplying House of Brides with dresses on April 30, 2011. House of Brides alleges that Alfred Angelo sent this termination letter due to pressure placed on it by competitors of House of Brides, including Alfred Angelo's own retail stores, demanding that Alfred Angelo compel House of Brides to comply with its minimum prices, or alternatively to discipline House of Brides and force it to sell at the policy's minimum price. At this time, however, even Alfred Angelo sold its own products below the 2010 MPP. According to House of Brides, Alfred Angelo was seeking to "enhance its own retail sales" at the expense of House of Brides; its policies were even designed to drive House of Brides out of business. Id. ¶ 65. After the May 2011 email request, House of Brides continued to discount Alfred Angelo products; Alfred Angelo then terminated its relationship with House of Brides on August 12, 2011.

As a result of this termination, House of Brides alleges that it was left with retail store samples of Alfred Angelo products that it had been required to purchase but on which it cannot now take orders. House of Brides estimates that it has lost in excess of $285, 000, including stock inventory, customer returns, duplicate orders, and customer cancellations. House of Brides claims that it was unable to fill existing orders or to enter into new contracts with individuals inquiring prospectively about Alfred Angelo products. Finally, House of Brides alleges that Alfred Angelo's conduct has resulted in artificially high prices for consumers and a lack of competition for Alfred Angelo products.

II. Discussion

Alfred Angelo moves to dismiss House of Brides' claims of price fixing in violation of the Sherman Act (Count IV), boycott in violation of the Sherman Act (Count V), violation of the Robinson-Patman Act (Count VI), violation of the Illinois Antitrust Act (Count VII), tortious interference with contract (Count VIII), and tortious interference with business expectancy (Count IX). As previously noted, the allegations in the SAC are nearly identical to those in the prior complaint; consequently, the Court's analysis is substantially unchanged with respect to the restated claims. The new claims, moreover, rest on the same inadequate factual foundation and fail for largely the same reasons.

In lieu of attempting to materially supplement its factual allegations, House of Brides devotes much of its effort to arguing that Twombly and Iqbal imposed only a plausibility standard, not a probability standard. That much is true, but it fails to address the pleading deficiencies identified in the Court's prior opinion. To survive a motion to dismiss, a complaint must include enough factual detail to give the defendant fair notice of the claims and grounds upon which they rest, and the allegations must add up to a claim for relief that is plausible on its face. Ashcroft v. Iqbal, 556 U.S. 662, 678-79 (2009); Bell Atl. v. Twombly, 550 U.S. 544, 555-57, 570 (2007); Engel v. Buchan, 710 F.3d 698, 709 (7th Cir. 2013). To make out a claim that is plausible, plaintiffs must allege enough factual matter, taken as true, to "raise a right to relief above the speculative level" and "nudge[] their claims across the line from conceivable to plausible." Twombly, 550 U.S. at 555, 570. In making this determination, the Court accepts all well-pleaded facts as true and draws all reasonable inferences in favor of the plaintiff, Navarro, 716 F.3d at 429, but does not accept as true legal conclusions couched as factual allegations, Iqbal, 556 U.S. at 679. Formulaic recitation of the elements of a cause of action supported by conclusory statements will not suffice. Iqbal, 556 U.S. at 678 (citing Twombly, 550 U.S. at 555); see also Tamburo v. Dworkin, 601 ...

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