Avenarius v. Eaton Corp.

898 F. Supp. 2d 729, 2012 U.S. Dist. LEXIS 188266, 2012 WL 4903373
CourtDistrict Court, D. Delaware
DecidedOctober 16, 2012
DocketCiv. No. 11-09-SLR
StatusPublished
Cited by10 cases

This text of 898 F. Supp. 2d 729 (Avenarius v. Eaton Corp.) is published on Counsel Stack Legal Research, covering District Court, D. Delaware primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Avenarius v. Eaton Corp., 898 F. Supp. 2d 729, 2012 U.S. Dist. LEXIS 188266, 2012 WL 4903373 (D. Del. 2012).

Opinion

MEMORANDUM OPINION

SUE L. ROBINSON, District Judge.

I. INTRODUCTION

On October 4, 2010, in the District of Kansas, plaintiffs Ryan Avenarius (“Avenarius”), Rodney E. Jaeger (“Jaeger”), James Cordes (“Cordes”) and Premier Produce Co. (“Premier”) (collectively “plaintiffs”) filed an antitrust class action complaint against various defendants, including Eaton Corporation (“Eaton”), Daimler Trucks North America LLC, Freightliner LLC, Navistar International Corporation, International Truck and Engine Corporation, PACCAR, Inc., Ken-worth Truck Company, Peterbilt Motors Company, Volvo Trucks North America and Mack Trucks, Inc. (collectively, “defendants”). (D.I. 1) The case was transferred to this District given its relation to ZF Merit or LLC v. Eaton Corp., Civ. No. 06-623-SLR (D.Del.) and Wallach v. Eaton Corp,, Civ. No. 10-260-SLR (D.Del.). Plaintiffs then filed an amended complaint on February 4, 2011. (D.I. 34) The amended complaint asserts the following counts: 1) violation of 18 state antitrust laws (for the following states: AZ; CA; DC; IA; KS; ME; Ml; MN; NE; NV; NM; NC; ND; SD; TN; VT; WV and WI); 2) violation of 13 state unfair competition laws (for the following states: AR; CA; DC; FL; HI; MA; NE; NV; NH; NM; NY; NC; VT); and 3) unjust enrichment.1

The court has jurisdiction pursuant to 28 U.S.C. § 1332(d)(2). For the following reasons, the court grants in part and denies in part defendants’ motions.

II. BACKGROUND

A. The Parties

Plaintiffs are purchasers of Class 8 trucks and, therefore, indirect purchasers of Class 8 transmissions. (D.I. 34 at ¶¶ 9-12) Avenarius is an Iowa resident who purchased a truck in Iowa; Jaeger is an [734]*734Iowa resident who purchased a truck in Wisconsin; Cordes is a Michigan resident who purchased a truck in Michigan; and Premier is a California-based corporation that purchased a truck in California. (Id.)

Defendants are involved in the manufacture and sale of Class 8 trucks. Eaton manufactures transmissions for Class 8 trucks. (Id. at ¶ 13) The remaining defendants (Daimler Trucks North America LLC, Freightliner LLC, Navistar International Corporation, International Truck and Engine Corporation, Paccar, Inc., Kenworth Truck Company, Peterbilt Motors Company, Volvo Trucks North America and Mack Trucks, Inc.), referred to as Original Equipment Manufacturers (“OEMs”), manufacture and sell Class 8 trucks. (Id. at ¶¶ 14-21) In order to assemble and sell Class 8 trucks, OEMs purchase component parts, such as transmissions, from suppliers, such as Eaton. (Id. at ¶ 27)

B. Class 8 Trucks and Transmissions

There are eight recognized classes of vehicles, with Class 8 trucks being the heaviest. (Id. at ¶ 25) Examples of Class 8 heavy duty trucks include the cement truck, dump truck, and long-distance freighter. (Id. at ¶ 26) The purchase of Class 8 trucks is unique in the sense that buyers can essentially build a truck to their desired specifications. (Id. at ¶ 27) When purchasing a Class 8 truck, buyers can consult OEM “databooks,” which list an OEM’s standard and non-standard component offerings2 and designate the specific components they desire in their trucks. (Id.)

C. Plaintiffs’ Allegations

Plaintiffs contend that Eaton has been the dominant and most widely recognized American manufacturer of Class 8 transmissions, holding a near monqpoly in the market since the 1950s. (Id. at ¶¶ 28; 42-45) In the 1990s, ZF Meritor established itself as a viable competitor to Eaton, producing desirable, competitive and innovative transmissions. (Id. at ¶¶ 28-29; 51-61) In response to this competition from ZF Meritor and a significant downturn in the Class 8 truck market which occurred in late 1999-early 2000, plaintiffs allege that Eaton and the OEMs conspired to put ZF Meritor out of business, thereby expanding Eaton’s monopoly and permitting all defendants to share in the profits resulting from this monopoly. (Id. at ¶ 62)

This conspiracy was allegedly achieved by Eaton entering into Long Term Agreements (“LTAs”) in the early 2000s with each of the four OEMs.3 (Id. at ¶¶ 62-68). While each Eaton-OEM LTA was separately negotiated and thus distinct, the LTAs shared a similar purpose and features. (Id. at ¶¶ 74-112) Each LTA contained a provision whereby the OEMs would receive sizable and lucrative rebates from Eaton assuming the OEMs utilized a certain percentage of Eaton transmissions annually. (Id.) For example, under the Freightliner-Eaton LTA, Freightliner was required to purchase 92% of its Class 8 transmission needs from Eaton in order to receive the specified rebates. (Id. at ¶ 77) Aside from tying percentage requirements to rebates, the LTAs included other provi[735]*735sions designed to minimize ZF Meritor’s market share. Examples of these provisions include eliminating ZF Meritor transmissions from databooks or removing them from the standard position, excluding non-Eaton transmissions from warranty programs and imposing price penalties for selection of a ZF Meritor transmission. (Id. at ¶¶ 74-113) In essence, plaintiffs argue that the LTAs were defacto exclusive dealing contracts and the OEMs all agreed with each other to enter into these agreements in order to eliminate ZF Meritor and share in the profits of Eaton’s monopoly. (Id. at ¶ 62; 66) In the end, plaintiffs allege that defendants’ conspiracy was successful as the LTAs greatly diminished ZF Meritor’s market share in the Class 8 transmission field and left it no opportunity for growth. (Id. at ¶¶ 115-117) In the face of these economic realities, ZF Meritor’s market share declined to an insignificant level. (Id.) Plaintiffs ultimately contend that they had to pay higher prices for transmissions and, in turn, for Class 8 trucks, as a result of defendants’ actions. (Id. at ¶¶ 4; 114)

III. STANDARD

In reviewing a motion filed under Federal Rule of Civil Procedure 12(b)(6), the court must accept all factual allegations in a complaint as true and take them in the light most favorable to plaintiff. See Erickson v. Pardus, 551 U.S. 89, 94, 127 S.Ct. 2197, 167 L.Ed.2d 1081 (2007); Christopher v. Harbury, 536 U.S. 403, 406, 122 S.Ct. 2179, 153 L.Ed.2d 413 (2002). A court may consider the pleadings, public record, orders, exhibits attached to the complaint, and documents incorporated into the complaint by reference. Tellabs, Inc. v. Makor Issues & Rights, Ltd., 551 U.S. 308, 322, 127 S.Ct. 2499, 168 L.Ed.2d 179 (2007); Oshiver v. Levin, Fishbein, Sedran & Berman, 38 F.3d 1380, 1384-85 n. 2 (3d Cir.1994). A complaint must con-

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Bluebook (online)
898 F. Supp. 2d 729, 2012 U.S. Dist. LEXIS 188266, 2012 WL 4903373, Counsel Stack Legal Research, https://law.counselstack.com/opinion/avenarius-v-eaton-corp-ded-2012.